www.engineersaustralia.org.au/ircwa

Western Australia Infrastructure Report Card 2010 ISBN 978-0858259782 © Engineers Australia, October 2010 All rights reserved. Other than brief extracts, no part of this publication may be produced in any form without the written consent of the publisher. All Report Cards can be downloaded from www.engineersaustralia.org.au. Acknowledgements This publication was only possible with the support of members of Engineers Australia, other building and infrastructure professionals, and representatives from government departments, industry and business and professional associations. Western Australian Infrastructure Report Card Committee John Ruprecht FIEAust CPEng (Chair) Chris Fitzhardinge FIEAust CPEng Bill Sashegyi FIEAust CPEng Bob Broadway FIEAust CPEng (Ret) Francis Norman OFIEAust CEngO Lorie Jones FIEAust CPEng Melissa Marinelli MIEAust Ed Scull OAM FIEAust CPEng Barry Tonkin FIEAust CPEng Barun Dutta FIEAust CPEng

Report Card contributors Jim Brown FIEAust CPEng Peter Addison Prof Stephen Emery FIEAust CPEng Dr Walter Green FIEAust CPEng Ian Loh MIEAust CPEng Brendon Brodie-Hall MIEAust Marion Evangelisti MIEAust CPEng Matthew Humble MIEAust Jillian Formentin MIEAust CPEng Shane Cremin

Western Australia Division project staff Janice Lake, Executive Director

National Project Director Project Director: Leanne Hardwicke, Director, National and International Policy, Engineers Australia

Consultant Principal Author: Athol Yates MIEAust, Australian Security Research Centre Project Team: Professor Priyan Mendis FIEAust CPEng, Henry Pike, Barbara Coe, Trudy Southgate and

Minh Duc Nguyen

Engineers Australia Western Australia Division 712 Murray Street West Perth WA 6005 Tel: 08 9321 3340 Fax: 08 9481 4332 www.engineersaustralia.org.au/wa/

Australian Security Research Centre Level 1 32 Thesiger Court Deakin ACT 2605 Tel: 02 6161 5143 Fax: 02 6161 5144 www.securityresearch.org.au

CONTENTS

Communiqué ............................................................................................................... i 

Ratings summary ...................................................................................................... v 

Overview ..................................................................................................................... 1 Rating process and description ................................................................................................. 1 State-wide issues ...................................................................................................................... 2 Cross-sector challenges ............................................................................................................ 3 

Transport .................................................................................................................... 7 1  Roads ........................................................................................................................ 9 

1.1  Summary ........................................................................................................................... 9 1.2  Infrastructure overview .................................................................................................... 10 1.3  Performance .................................................................................................................... 16 1.4  Future challenges ............................................................................................................ 21 1.5  Report Card rating ........................................................................................................... 22 

2  Rail ........................................................................................................................... 23 2.1  Summary ......................................................................................................................... 23 2.2  Infrastructure overview .................................................................................................... 23 2.3  Performance .................................................................................................................... 34 2.4  Future challenges ............................................................................................................ 40 2.5  Report Card rating ........................................................................................................... 41 

3  Ports ........................................................................................................................ 43 3.1  Summary ......................................................................................................................... 43 3.2  Infrastructure overview .................................................................................................... 43 3.3  Performance .................................................................................................................... 52 3.4  Future challenges ............................................................................................................ 54 3.5  Report Card rating ........................................................................................................... 54 

4  Airports ................................................................................................................... 57 4.1  Summary ......................................................................................................................... 57 4.2  Infrastructure overview .................................................................................................... 57 4.3  Performance .................................................................................................................... 64 4.4  Future challenges ............................................................................................................ 68 4.5  Report Card rating ........................................................................................................... 68 

Water ........................................................................................................................ 71 5  Potable water .......................................................................................................... 77 

5.1  Summary ......................................................................................................................... 77 5.2  Infrastructure overview .................................................................................................... 78 5.3  Performance .................................................................................................................... 88 5.4  Future challenges ............................................................................................................ 92 5.5  Report Card rating ........................................................................................................... 93 

Contents

6  Wastewater .............................................................................................................. 95 6.1  Summary ........................................................................................................................ 95 6.2  Infrastructure overview ................................................................................................... 95 6.3  Performance ................................................................................................................. 102 6.4  Future challenges ......................................................................................................... 105 6.5  Report Card rating ........................................................................................................ 105 

7  Stormwater ............................................................................................................ 107 7.1  Summary ...................................................................................................................... 107 7.2  Infrastructure overview ................................................................................................. 107 7.3  Performance ................................................................................................................. 112 7.4  Future challenges ......................................................................................................... 113 7.5  Report Card rating ........................................................................................................ 114 

8  Irrigation ................................................................................................................ 117 8.1  Summary ...................................................................................................................... 117 8.2  Infrastructure overview ................................................................................................. 117 8.3  Performance ................................................................................................................. 122 8.4  Future challenges ......................................................................................................... 123 8.5  Report Card rating ........................................................................................................ 123 

Energy .................................................................................................................... 125 9  Electricity ............................................................................................................... 127 

9.1  Summary ...................................................................................................................... 127 9.2  Infrastructure overview ................................................................................................. 128 9.3  Performance ................................................................................................................. 149 9.4  Future challenges ......................................................................................................... 156 9.5  Report Card Rating ....................................................................................................... 157 

10  Gas ......................................................................................................................... 159 10.1 Summary ...................................................................................................................... 159 10.2 Infrastructure overview ................................................................................................. 159 10.3 Performance ................................................................................................................. 171 10.4 Future challenges ......................................................................................................... 173 10.5 Report Card Rating ....................................................................................................... 174 

Telecommunications ............................................................................................ 175 11.1 Summary ...................................................................................................................... 175 11.2 Infrastructure overview ................................................................................................. 176 11.3 Performance ................................................................................................................. 185 11.4 Future challenges ......................................................................................................... 191 11.5 Report Card Rating ....................................................................................................... 192 

Appendices ............................................................................................................ 193 Appendix A: Rating methodology ................................................................................. 194 Appendix B: Units and acronyms ................................................................................. 196 Appendix C: Glossary .................................................................................................... 197 Appendix D: References ................................................................................................ 201 

i

COMMUNIQUÉ

Western Australia’s population has grown considerably in recent years and this has been accompanied by significant infrastructure projects that have been vital in maintaining the economic, social and environmental welfare of the State. Western Australia’s infrastructure is generally in adequate to good condition, but there are areas that need significant improvement such as telecommunications, stormwater and local roads. In 2005, Engineers Australia took the initiative to raise community awareness of the importance of infrastructure by producing the 2005 Western Australia Infrastructure Report Card. The 2005 Report Card gave a strategic overview of the important infrastructure sectors and independently assessed the fitness for purpose of Western Australia’s economic infrastructure. It found that Western Australia’s infrastructure was in reasonable shape compared to the national average, but expressed concern about the impact of high population and economic growth and the need to replace and upgrade existing infrastructure while planning for new infrastructure to meet increased demand. Five years on, this 2010 Report Card again assesses Western Australia’s infrastructure in terms of fitness for purpose to meet current and future needs and we have found that Western Australia’s infrastructure is generally in adequate to good condition. Since 2005, the expected population and economic growth came to pass, as did the increase in demand, which resulted in stress on some infrastructure sectors. Predicted population growth (an increase between 50% and 120% by 2051) is expected to continue to put pressure on infrastructure well into the future, particularly for water, electricity, transport and telecommunications. Climate change will also bring a series of challenges, including the need to modify design criteria. Climate change will require robust long term infrastructure planning and coordination between all spheres of government. Challenges also remain in addressing the disparity between rural and urban areas; issues for some communities who experience a high level of fly in- fly out population; managing demand and asset management for existing infrastructure; and the need to build intelligent infrastructure networks. Investment in roads has produced the new Perth-Bunbury Highway, Karratha-Tom Price Highway, Mitchell Freeway extension, and works to improve other major highways. However, funding for maintenance and renewals has not kept up to demand and the gap is widening. Freight transport management requires a review given the significant growth in this area, and road pricing mechanisms need closer scrutiny. National and State roads have maintained a reasonable standard, but local roads have deteriorated since 2005. Metropolitan rail infrastructure has continued to improve, with major line extensions and increased patronage. Major projects include the Southern Suburbs Rail line and the Perth city link project. The Pilbara rail lines are of a high quality. However, mass transit services in north-east Perth require attention, as does the grain network and the provision of high efficiency intermodal terminals. Improved connections to south western ports are also required.

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Port infrastructure has received attention in response to growing demand, particularly from the resources sector. The works at Fremantle, Port of Albany and Port Hedland are all welcome projects. Meeting the demand for future container growth will be an issue to be addressed. Ensuring transport corridors to ports by sensible integrated land use and port development decisions is essential if Western Australia is to have an efficiently functioning port system. Unlike most of Australia, regional airports in Western Australia have received reasonable investment to meet changing demand. This is offset by the investment still needed to meet long term passenger and freight growth. Perth airport has had some investment, but this still lags demand and anticipated growth. The commitment to the international terminal consolidation is an issue, and access to the airport remains a major concern. Water in Western Australia remains problematic. Predictions point to a drying climate and coupled with population growth, this means that demand for water will be a challenge for the future. For potable water, increased diversity of water sources such as the desalination plants are welcome, as is the long term planning regime (50 years) implemented by the Water Corporation. Demand management remains a challenge, and will continue well into the future, given expected population increases. Funding to address these challenges must be a priority. Wastewater infrastructure has seen an improvement, particularly through the connection of metropolitan and regional septic tank users to reticulated sewage systems, although at a reduced rate since 2005. Sewage overflows have been reduced and the use of recycled water to replenish groundwater is supported. Further work needs to occur to raise the standard of sewage infrastructure in regional towns and capacity needs to be maintained to keep pace with growth. Stormwater has seen little development since 2005, apart from improved guidance documents. Stormwater discharge quality needs to be improved and better information on the location and condition of stormwater assets need to be gathered. The Swan Coastal Plain urgently needs a stormwater plan to effectively manage urban stormwater. The implementation of water sensitive urban design principles needs to be accelerated. Irrigation infrastructure is more efficient and improvements have resulted in a reduced water loss. There has been a growth in inland irrigated areas. This is offset by the large percentage of open and unlined irrigation channels and problems with salinity in some irrigation areas. There is no comprehensive energy policy for Western Australia and historical decisions about the pricing of gas and electricity have created difficulties. Electricity generation and transmission networks in the south-west have largely met the demand of the expanded population. The establishment of the wholesale electricity market was a necessary intervention, but faces some significant challenges, such as ensuring competition. Ageing transmission and distribution infrastructure will need to be addressed through adequate maintenance and renewal programs. Gas infrastructure is generally in good condition, and sources of supply are plentiful but remote from demand. There has been an expansion of capacity through duplicating sections such as has occurred with the Dampier to Bunbury pipeline. Concerns remain about security of supply in terms of the vulnerabilities in gas production and transmission

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infrastructure. As well, the distribution networks need to be able to be expanded to new small industrial customers. Telecommunications infrastructure in Western Australia has many challenges. While fixed telephony services are of a good standard, data services have major limitations, with many broadband black spots. There is also a considerable disparity between rural and metropolitan users. Ratings are given below for the current and past Western Australia and National Infrastructure Report Cards.

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Roads overall National roads State roads Local roads

C+ B- B- C-

Not rated B- B- C+

C C+ C C-

Not rated C C- D

Rail C+ C+ C- D-

Ports B- B- C+ B

Airports C+ Not rated B B

Potable water B- B- B- C

Wastewater B B- C+ C-

Stormwater C C+ C- D

Irrigation C+ C+ C- D-

Electricity B- B- C+ B-

Gas C+ B+ C+ C

Telecommunications C- Not rated Not rated B

Recommendations

Engineers Australia makes the following recommendations that are aimed at ensuring that Western Australian infrastructure meets the current and future requirements of the community and industry.

1. The Western Australian Government produces an overarching infrastructure plan for the next forty years that meets the needs of the rapidly growing State and addresses the interactions between land-use, water, energy, transport and telecommunications.

2. Long-term regional infrastructure plans need to be prepared for each of the nine regions to facilitate private sector investment by providing an understanding of the commitment of governments and the sequencing of projects.

3. Sector infrastructure plans, such as the metropolitan freight, state transport, metropolitan transport and Perth bicycle network plans, need to be prepared as outlined in Directions 2031 and Beyond.

4. Infrastructure planning should lead rather than follow the development of new urban areas and redevelopment of existing areas.

5. The Western Australian Government closely monitors the performance of the urban housing infill targets in relation to the infrastructure requirements for the Perth metropolitan area.

6. Governments, in partnership with the private sector, must increase expenditure on infrastructure based on the priorities established in the State and regional infrastructure plans.

7. Greater effort be given to managing and reducing demand for infrastructure services through changes in lifestyle, land-use planning, local employment, use of smart technology and pricing, as it is recognised that it is often not practical nor financially viable to continually increase supply, particularly for peak demand.

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8. The income derived from the shift to real cost pricing of water, electricity and other infrastructure services must be directly linked to investments to improve reliability and quality of service.

9. The Infrastructure Coordinating Committee needs to improve its engagement with industry and the community to establish processes and priorities for the provision of major infrastructure and the accompanying private sector investment.

10. The Western Australian Government’s approach to Australian Government initiatives, notably Infrastructure Australia, needs to be more effective so as to increase its share of national investment, as this would better reflect the infrastructure requirements of the State.

v

RATINGS SUMMARY

The following summarises the 2010 WA Infrastructure Report Card ratings.

Infrastructure type Grade Comment

Roads overall National roads State roads Local roads

C+ B- B- C-

These ratings recognise that there have been improvements to national roads, maintaining their high standard. While there has been significant capital expenditure on State roads, road capacity expansions have not kept pace with the growth in both freight and passenger demand. Maintenance and renewal expenditure is inadequate to maintain the quality of the existing State roads. Local roads have deteriorated due to insufficient maintenance and renewal expenditure. Insufficient effort has been given to reducing road demand through shifting road usage to rail freight, public transport, and cycling/walking.

Rail C+ This rating recognises that the metropolitan network has continued to improve, but problems exist, including overcrowding at peak times and insufficient station car parking. The regional rail network has contracted in the South West Land Division, parts of the grain network require substantial maintenance to maintain their load capacity and on-going viability, and there is a lack of long-term certainty over parts of the network. Problems exist with the interstate network and the connection to ports and intermodal facilities, meaning that road transport is increasing its competitiveness over rail. The Pilbara lines continue to be of a high efficiency, reflecting both their recent construction and high design standards, as well as operating as part of a vertically integrated supply chain.

Ports B- This rating recognises that there has been a substantial expansion of major WA ports in response to growing demand from the resources sector and the broader industry. At some ports, this expansion is causing a conflict between port-related activities and surrounding commercial and urban land users, resulting in land-side connections becoming stressed. The growth of the economy will require further expansion and there is a need for long-term port planning and investment.

Airports C+ This rating recognises that there has been significant investment in the Perth Airport although this has lagged behind the dramatic growth in demand. There is ongoing concern about the commitment to, and the timing and logistics of, the International Terminal consolidation (Terminal WA) and the major road improvements around the airport (Gateway WA project). There has been an appropriate level of development at regional airports to meet changing demand, and incremental and sustained improvements in remote airport infrastructure due to the Regional Airport Developments Scheme.

Potable water B- This rating reflects the improvement in water security in Perth due to the construction of major new water supplies. However, planning and investment across regional WA continues to be an issue. The advances are noteworthy given the drying climate and the increasing demand arising from economic and population growth. The water infrastructure in newer metropolitan areas and expanding towns is of a high quality, however, assets are ageing in Perth’s CBD and older towns. While the long-term water planning approach for southern WA is excellent, there is concern about the availability of funding over the long term to deliver it. Water systems in regional towns and remote areas are of a reasonable standard, albeit lower than Perth, given their environmental and financial constraints and legacy infrastructure.

Wastewater B This rating recognises that there has been an improvement in wastewater infrastructure in terms of environmental outcomes and operational performance across the State. However, the delay to complete the infill sewerage program and the slow increase in water recycling in Perth are notable deficiencies.

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Infrastructure type Grade Comment

Stormwater C This rating recognises that there has been an improvement in policy and guidance documentation on stormwater infrastructure, but little practical developments. There is a lack of information on stormwater assets constraining an effective understanding of the scale of the issue, which prevents prioritisation of work. There has been insufficient attention given to improving stormwater quality, although some local governments have invested in better management of discharge into environmentally-sensitive areas. The drying climate may have masked hydraulic capacity and asset quality problems of stormwater infrastructure.

Irrigation C+ This rating recognises that there have been improvements in irrigation infrastructure in several irrigation areas resulting in improved efficiency and reduced water loss. The asset management regime for each irrigation schemes is developing. The expansion of the Ord River Irrigation Area is incorporating higher standards of water management. There is a need for continuing investment in water efficiency both on-farm and in distribution networks.

Electricity B- This rating recognises that the expansion of the generation and transmission network in the South West Interconnected System has been adequate to meet the high growth in demand experienced with the expansion of population. However, problems exist, including the need for reform of the Wholesale Electricity Market, the lack of transmission capacity in many urban and regional areas, reliability concerns in regional areas, and ageing transmission and distribution assets. The NWIS is sub-optimal for today’s electricity needs in the Pilbara region. The State’s isolated electricity systems are generally in good condition and many remote communities have received improved electricity supplies over the last few years due to the regularisation program.

Gas C+ This rating recognises that WA is fortunate in having significant gas reserves and has efficient gas transmission pipelines that have expanded in line with demand from large customers. However, the single points of failure in production and transmission infrastructure are a major concern, as is the lack of a long-term gas policy with a supportive regulatory framework that can deliver infrastructure to meet the rapidly-evolving gas demand in WA.

Telecommunications C- This rating recognises that the PSTN network is of a good standard for telephony, but has major limitations in providing data services, as seen in the significant broadband black spots in metropolitan Perth and very limited availability in non-metropolitan areas. Mobile phone coverage in larger urban areas across the State is adequate, however, there is a lack of coverage outside major regional centres and, critically, along major highways. In addition, there is a lack of competitive infrastructure for mobile phone networks outside major centres. Backhaul is adequate to metropolitan areas but is failing to provide the level of services required in other areas of the State.

1

OVERVIEW

Rating process and description The objective of the Report Card is to rate the quality of economic infrastructure. Engineers Australia has been rating infrastructure since 1999. In 1999, 2001 and 2005, national report cards were published. Report Cards on Australian States and Territories have also been published. This Report Card revises and expands on the 2005 edition of the WA Infrastructure Report Card. The purposes of the Report Cards are to: Raise awareness of politicians, media, business and the public that infrastructure underpins the

community’s quality of life and that inadequate infrastructure impedes economic and social growth, and reduces environmental and societal sustainability

Generate debate on the adequacy of the infrastructure (including condition, distribution, funding and timing) required to meet society’s needs

Increase appreciation of the value of developing an integrated and strategic approach to the provision of infrastructure

Raise awareness of the new challenges facing Australia’s infrastructure due to climate change, change in demographics, demand increases, resilience and sustainability

Improve the policy, regulation, planning, provision, operation and maintenance of infrastructure.

This Report Card provides a strategic overview of WA infrastructure that other organisations can use when they undertake detailed analysis of particular infrastructures. It also provides a benchmark that the community can use to identify need and evaluate alternative infrastructure priorities over time. Ratings have been based on an assessment of asset condition, asset availability and reliability, asset management, sustainability (including economic, environmental and social issues) and resilience. The assessment includes evaluating infrastructure policy, regulation, planning, provision, operation and maintenance. (See Appendix A: Rating methodology for details.) The assessment was carried out through research and consultation. Interviews were held with relevant stakeholders and documents were analysed. The assessment has relied on publicly available information and has, in line with its aims, focused on strategic issues, supplemented by quantitative performance measures where these were readily available. A number of industry associations were consulted and Engineers Australia provided input through its experts. Ratings used are comparable with those of past Report Cards. The rating scale is detailed below.

Overview

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Rating scale

Letter grade

Designation Definition*

A Very good Infrastructure is fit for its current and anticipated future purposes

B Good Minor changes are required to enable infrastructure to be fit for its current and anticipated future purposes

C Adequate Major changes are required to enable infrastructure to be fit for its current and anticipated future purposes

D Poor Critical changes are required to enable infrastructure to be fit for its current and anticipated future purposes

F Inadequate Inadequate for current and anticipated future purposes *Fitness for purpose is evaluated in terms of the needs of the community, economy and environment using criteria of sustainability, effectiveness, efficiency and equity.

State-wide issues Past investment in WA’s infrastructure

The figure below illustrates the investment in economic infrastructure over a 25-year period. Economic infrastructure covers roads, bridges, railways, ports, electricity generation and transmission facilities, water and sewerage facilities and telecommunications facilities. WA’s investment levels have tracked parallel to the national levels until 2001 when investment increased compared to the national level. Investment levels are expected to increase significantly over the next few years. Index of economic infrastructure expenditure in WA and nationally (real prices, base year index is 1988/89, base is 100 for national expenditure)1

Major factors influencing WA infrastructure demand Both population and economic growth will be key drivers of infrastructure demand. Population The figure below shows WA population projections along a high and low future growth path. It shows that WA’s population will expand from around 2.2 million in 2008 to 3.4 million (50% increase) in 2051 under low growth assumptions, or 5 million (127% increase) under high growth assumptions. The vast majority of the population growth will occur in Perth. A growing population will accelerate the demand for all water, electricity, transport and telecommunication services.

0

50

100

150

200

250

300

350

400

450

1988

-89

1989

-90

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Pop

ulat

ion

Nor

mal

ised

Inde

x (A

ust 1

988-

89 B

ase)

WA AUSTRALIA

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WA recent and projected population using high and low growth assumptions2

Gross State Product Growth The table below shows WA’s projected Gross State Product Growth. Economic growth directly increases demand by businesses for infrastructure services, and indirectly increases demand by consumers due to their raised standard of living. WA’s Gross State Product Growth3

Gross State Product Growth

2008/09 Actual 2009/10 Estimated

actual

2010/11 Budget

estimate

2011/12 Forward Estimate

2012/13 Forward Estimate

Percentage change 0.7% 3.75% 4.5% 4.75% 3.0%

Climate change Climate change in WA is expected to include: By 2030, rainfall decreasing by between 2% and 20% and temperatures increasing by between

0.5 and 2.1°C By 2070, rainfall decreasing by between 5% and 60% and temperatures increasing by between

01.0 and 6.5°C Rising sea levels by between 0.18 and 0.79m by 2099.4

The impacts on infrastructure of these changes include: Significant reduction in the amount of water entering dams, placing greater emphasis on water

demand reduction and manufactured water Higher temperatures causing degradation of road and building materials, damage to building

foundations and gas and water piping, and increased flooding and bushfire risk An increase in storm intensity causing structural damage due to increased wind speed and rail

and hail intensity, and damage from flash-flooding Sea level rise exacerbating coastal erosion, coastal inundation and the intensity and frequency

of storm surges, all of which damage coastal infrastructure including stormwater and roads Significant increases in peak summer energy demand due to air conditioning needs, which may

increase the risk of blackouts.

Cross-sector challenges While each chapter identifies sector-specific challenges to the provision of infrastructure, below are challenges that cross multiple infrastructure sectors. Need for strategic planning, coordination and integration. Efficient infrastructure provision

requires sound strategic planning, coordination and integration. This involves coordination

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

2039

2041

2043

2045

2047

2049

2051

Mill

ions

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across infrastructure modes, such as between road and rail, and across stakeholders, such as the three levels of government, the private sector and the community. Such an approach increases the likelihood of decisions being made that complement one another, rather than undermine all. However, implementing such an approach is both time consuming and costly. The challenge is ensuring that such an approach occurs in the shortest possible time and at the lowest cost.

Complementary land-use and infrastructure planning. Land-use planning needs to be integrated with infrastructure provision. For example, to achieve pleasant high density residential and business developments, a key requirement is the availability of public transport infrastructure. When land-use decisions are being made, planning of infrastructure for the short and long term needs to occur, and this must include the identification and preservation of infrastructure corridors for future growth.

Addressing the rural–urban disparity. There is a significant difference in infrastructure quality between rural and urban infrastructure. Given the lower population base and hence the income available for infrastructure providers, a gap is expected. Effort should be given to closing this gap for equity reasons and for the pragmatic reason that improved infrastructure in regional and rural areas will encourage more metropolitan businesses to relocate there, thus reducing pressure on the crowded capital and major cities.

Addressing the consequences of ‘fly in–fly out’. ‘Fly in–fly out’ results in highly transient populations in regional areas. While fly in-fly out is important to the success of many current resource projects, these workers do not contribute to the community base in the same way that locally-resident workers do. Consequently, while an area may have a large number of workers, they do not have the community services that such a population normally would. They can distort the local economy and infrastructure needs compared to other regional towns, for example by requiring larger airports and town water supply (substitute community facilities), both provided by local governments. Effort needs to be made to increase the attraction of these towns for residential workers to create a more balanced economic base and community. The infrastructure demands caused by fly-in fly out workers also need to be recognised by State and Federal Government when allocating grants to local governments.

Increasing capital works funding for infrastructure. The WA Government has significantly increased its investment on schools and hospitals over the last five years, but the investment by both government and the private sector in economic infrastructure has not occurred at the same rate. There is a pressing need for increased capital expenditure to accommodate the State’s significant growth, and due to the size of demand, this high level of investment will be likely to be required for at least a decade.

Increasing quality of asset management. Due to the newness of much of WA’s infrastructure, there has been less focus on asset management in WA than in the eastern States. However, as infrastructure ages, maintenance becomes more important and decisions need to be made on renewing, refurbishing or replacing infrastructure. The ageing of WA’s infrastructure is driving an increased focus on whole-of-life asset management and this requires an in-depth knowledge of the performance and quality of existing assets. Some infrastructure providers already have sophisticated asset management plans and systems in place, but more are still developing them. Once developed, the plans must be funded to allow their implementation. The challenge is to raise the average quality of asset management plans and systems across the State.

Implementing demand management. Managing demand for infrastructure services has become critical as a way of reducing the need for new infrastructure and increasing the efficiency of existing infrastructure. Its benefit is demonstrated in the outcomes of the demand management practices implemented by the electricity and water sectors. There has been less effort put into demand management in the transport sector, primarily due to the lack of an effective pricing mechanism that takes into account the economic, social and environment cost of the transport task. The Managed Motorways project will partially address the lack of focus on

Overview

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demand management, but it may need to be supported via congestion pricing. All sectors need to utilise demand management more comprehensively and effectively.

Continually adapt to the drying climate. WA has been experiencing a drying climate for several decades now and some of its infrastructure has been responding to this new environment. This is most obviously seen in the development of the desalination plants. However, other elements of infrastructure have not factored in the drying climate. For example, there is little consideration of the rising sea level and its impact on coastal stormwater systems and roads. WA needs to improve some aspects of its response to climate change.

Addressing the growing skills shortages. In WA, an engineering skills shortage in some infrastructure areas already exists. Further shortages will arise not only due to the increased demand for staff to work on infrastructure projects across the nation, but also due to the large numbers of engineering practitioners retiring over the next decade, and an inadequate supply of graduates. The consequence of this shortage will be delayed and higher cost projects. WA’s approach, which includes developing a State Migration Plan and industry workforce development plans, should improve the skills shortage in the medium term. An important dimension of increasing the skilled workforce is to ensure that the impact of the skilled population growth on existing infrastructure is factored into existing infrastructure plans.

Building intelligent infrastructure networks. Infrastructure in the future will increasingly be intelligent. Intelligent infrastructure has attached or built-in components (e.g. sensors and cameras) that are able to collect and transmit information about its physical state. This information can be used to identify when water pipes require maintenance, when traffic conditions should be changed to improve flows, and which route motorists should use to minimise travel time. Currently, very little of WA’s infrastructure could be called intelligent. Challenges to building intelligent infrastructure include justifying the cost of investing in intelligent infrastructure, designing network-wide intelligent infrastructure systems, and providing a process so that third parties can access infrastructure data and exploit it.

Conclusion WA’s infrastructure is generally in adequate to good condition, but there are some high quality components as well as areas that need significant improvement. While the dramatic increase in demand due to population and economic growth has resulted in areas of infrastructure stress, at an economy-wide level, the State’s infrastructure is generally fit for purpose. However, in many areas, the infrastructure is at near capacity and is ageing. This means that further increases in demand can only be accommodated through substantial network expansions and refurbishments. This will require substantial investment from governments and industry, broad engagement in future focused planning, and supportive regulatory regimes to sustain high levels of investment and meet community expectations.

Overview

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7

TRANSPORT

Integrated transport The WA Government is currently developing the State Transport Strategy. Its key components will be a Transport Policy Framework, and Integrated Regional Transport Plan and an Integrated Metropolitan and Peel Transport Plan.5 The strategy will describe a medium to long-term view of the State’s transport needs across all transport modes, together with the infrastructure programs and corridor protection to ensure future economic development. Key State and Australian Government agencies involved in transport planning and management are: Department of Transport (WA Government). The Department is responsible for operational

transport functions and strategic transport planning and policy across the range of public and commercial transport systems covering road, rail, ports and airports.a To integrate and improve the coordination of the State’s transport operations, regulatory functions and policy development processes, in 2010 the WA Government created the Director General –Transport who would head the Department of Transport, Main Roads WA and the Public Transport Authority.

Main Roads WA (WA Government). Main Roads WA is responsible for road management, construction and safety. The Department of Main Roads manages the National Road Network (for which the Australian Government provides a funding contribution), State roads and main roads. The Department of Transport is responsible for the licensing and registration of road users.6

Public Transport Authority (PTA) (WA Government). The PTA is responsible for the delivery of public transport and operates four major service systems in Western Australia: Rail, bus and ferry services in the metropolitan area (Transperth) Public transport services in regional centres Coach and rail passenger services to regional areas (TransWA) School bus services. It is also responsible for designing, building and maintaining transport infrastructure.

WA Planning Commission (WAPC) (WA Government). The WAPC is the statutory authority with State-wide responsibilities for urban, rural and regional land-use planning and land development matters. The WAPC responds to the strategic direction of government and is responsible for the strategic planning of the State. It facilitates the Infrastructure Coordinating Committee, which advises WAPC on planning for the provision of physical and community infrastructure throughout the State. The Committee has the powers to coordinate the metropolitan development program, the country land development program, and the provision of infrastructure for land development.7

Local government. Local government is responsible for planning, managing and maintaining local roads. Its road funding comes via rates and parking fees, as well as from the WA and Australian Governments. Local government is generally responsible for the management and maintenance of the local components of the arterial roads in urban areas such as roadsides, service roads, parking and footpaths. Most regional and remote airports are owned and managed by local governments.

a Prior to 1 July 2009, this Department was part of the Department for Planning and Infrastructure.

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Department of Regional Australia, Regional Development and Local Government/ Department of Infrastructure and Transport (Australian Government). These Departments has a policy advisory role in transport, management of some transport programs, and provides funding for some WA transport activities.

Freight and Logistics Council of WA. This Government-funded industry group formed in 2009 focuses on strategic policy issues. The objective of the Council is to improve strategic policy outcomes for Government and industry through ongoing liaison between the sectors.

WA Port Operations Task Force. A Government-funded industry group that ensures the efficient passage of goods and vessels through WA ports by determining practical resolutions for identified operational issues.

Civil Aviation Safety Authority (CASA). CASA is an independent statutory authority established in 1995 under the Civil Aviation Act 1988 to regulate aviation safety in Australia and the safety of Australian aircraft overseas.

Airservices Australia. Airservices Australia is the monopoly provider of air traffic management and fire fighting services at Australia’s major civil airports.

Centre for Excellence and Innovation in Infrastructure Delivery (CEIID) (WA Government). CEIID is a collaborative alliance between key infrastructure delivery agencies, government trading enterprises and other government bodies. It was established in 2007 to improve collaboration, share knowledge and drive reform across a broad spectrum of activities associated with public works, infrastructure delivery and strategic asset management. CEIID is supported by the Program Management Office (PMO), a branch within the Department of Treasury and Finance.8

9

1 Roads

1.1 Summary

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Roads overall C+ Not rated C Not rated

National roads B- B- C+ C

State roads B- B- C C-

Local roads C- C+ C- D

These ratings recognise that there have been improvements to national roads, maintaining their high standard. While there has been significant capital expenditure on State roads, road capacity expansions have not kept pace with the growth in both freight and passenger demand. Maintenance and renewal expenditure is inadequate to maintain the quality of the existing State roads. Local roads have deteriorated due to insufficient maintenance and renewal expenditure. Insufficient effort has been given to reducing road demand through shifting road usage to rail freight, public transport, and cycling/walking. Since the last Report Card, the major road sector developments have been: Reform of Main Roads WA’s maintenance and asset management approach Widening of the gap between actual expenditure on road maintenance and renewals and what

is required to maintain the existing quality of local government roads Decline in planned maintenance on State-controlled roads.

Recently completed and in-progress major infrastructure projects include: The $705 million New Perth Bunbury Highway, completed in 2009 The $140 million second stage of the Karratha–Tom Price Highway, completed in August 2008 The $160 million extension of the Mitchell Freeway to Hodges Drive, completed in November

2008 The $101.4 million 2.6km four-lane dual carriageway, including a bridge over the Swan River,

on the Reid Highway, completed in 2010 In-progress duplication of the Dampier Highway, due for completion in 2011 $120 million construction of a grade-separated interchange with the Roe highway bridging the

Great Eastern Highway, due for completion in 2013/14 $225 million construction of Stage 1 of the Great Eastern Highway bypass, due by June 20129 Great Northern Highway Kimberley Project.

Challenges to improving road infrastructure include: Closing the funding gap for local government and State-controlled roads Improving road efficiency measures Rebuilding technical expertise within the transport portfolio, including Main Roads WA Better managing freight transport Responding to the growth of bulk freight on roads Determining an appropriate road pricing mechanism Addressing rising expectations of a seamless transport network Responding to the need for heavier pavements Delivering integrated land-use and transport planning outcomes

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Increasing the role of rail transport Improving the efficiency of intermodal facilities.

1.2 Infrastructure overview

1.2.1 System description WA road infrastructure comprises: National Road Network roads (4,902km) State highways (6,041km) Main roads (7,082km) Local government roads (131,272km)10 Other roads including industry, forestry, National Park and public roads (38,000km).11

The total length of roads in WA is over 180,000km and spans enormously diverse climatic regions and road user needs. The WA road network is displayed in Figure 1.1. The most important roads are those classified as either part of the State-controlled network or local government network. The State-controlled network consists of the main interstate and intrastate roads including the National Road Network roads, highways and main roads. The network is managed by Main Roads WA and the value of Main Road’s road assets was $38.5 billion in 2009.12 The roads of Main Roads WA represent approximately 10% of the total length of WA roads but handle around 60% of the traffic volumes.13 On the State-controlled network, there are 1,032 bridges, 343 of which are timber and 689 are concrete. The local government network represents about 72% of the State’s road network by length. Table 1.1 details the road length and type for local government roads. Some 72% of these roads are not sealed. Local government is also responsible for bridges on these roads, and has over 57,000m2 of concrete and 104,000m2 timber bridges on its network.14 A sub category of local roads is the Local Roads of Regional Significance (LRRS). There are 14,733km of these. LRRS are divided into Regional Distributors with a total length of 12,803km and District Distributors for metropolitan areas with a total length of 1,929km.15 Table 1.1: Local road statistics regional road group boundaries, 30 June 2008 (road lengths – km)16

Region Seal Gravel Formed Unformed Total

Gascoyne 373 1,101 2,229 547 4,249

Goldfields Esperance 1,437 6,689 4,211 5,372 17,709

Great Southern 2,798 7,617 1,678 422 12,514

Kimberley 470 1,569 1,527 1,407 4,973

Metropolitan 11,986 250 54 28 12,317

Mid West 2,723 7,516 5,202 2,189 17,630

Pilbara 568 2,590 2,295 1,044 6,497

South West 5,557 3,861 711 174 10,303

Wheatbelt North 6,197 11,771 5,014 810 23,793

Wheatbelt South 3,514 10,592 2,625 331 17,063

State 35,622 53,557 25,546 12,324 127,049

The length of the local government roads has increased by 11.2% over the decade to 2007/08, with sealed roads in built-up areas growing by 14.5%, and sealed roads outside built-up areas growing by 31.4%.The replacement value of the network was $17.7 billion as of 30 June 2008, with sealed roads in built-up areas valued at $9.2 billion and bridges at $1.03 billion.17

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Figure 1.1: The WA road network18

Some 52% of local road funding comes from local government sources, 29% from the Australian Government, 17% from the WA Government and 2% from private sources.19 The WA Government funding is provided under the State Road Funds to Local Government Agreement. The current Agreement specifies that 27% of Vehicle Licence Fees (VLF) are provided as local roads funds. A new agreement is currently being negotiated to come into effect from July 2011, and it is not likely to change substantially, as the existing arrangements are fundamentally sound.

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The other roads are mostly managed and maintained by the Department of Environment and Conservation (DEC). These consist of about 38,000km of roads and tracks that provide public access for recreational and tourism activities, as well as for forestry, commercial fishing and fire response purposes.20 About one third of the roads have permanent surfaces. In October 2009, DEC completed a roads classification, assessment and inventory project to determine accurately its road assets. It also completed an inventory of its bridges in 2009. This information is being used by DEC to prioritise road improvement works and better coordinate road projects with Main Roads WA and local government.21 An important element of road infrastructure is provision for cycling. In Perth, the number of bicycle journeys has more than doubled over the past five years. The most popular path has recorded counts as high as 2,300 trips per day.22 In excess of $50 million has been spent on expanding the Perth Bicycle Network and the Regional Bicycle Network over the last five years and the network has grown significantly in length. The expansion is being guided by the Perth Bicycle Network Plan (1996); this plan is currently being revised and is expected to be released in late 2010. For nearly a decade, Main Roads WA has had a policy of incorporating cycleways or other bicycle friendly infrastructure elements into new major road developments. The consequence of this is that new roads, such as the Perth to Bunbury Highway, have cycling infrastructure integrated into the project, making them significantly safer than older roads.

1.2.2 Policy and governance The WA Government sees road infrastructure as a key element to achieving its strategic vision to provide the best opportunities for current and future generations, as roads contribute to this through: Safely linking goods, people and places Facilitating industrial, commercial and business development Enabling efficient access to other modes of transport Contributing to the economic advancement of WA and Australia.23

Implementing road policy is the responsibility of the Department of Transport, which provides strategic direction for transport, and Main Roads WA. The last decade has seen a major change in direction for Main Roads WA. Rather than focusing on the construction and maintenance of its road network, Main Roads WA has shifted to become a road network operator focusing on delivering a system of road transport that is safe, accessible and efficiently maintained. A key element of this was to divest itself of the road maintenance and construction functions. Since the late 1990s, Main Roads WA has contracted asset management and maintenance services using Term Network Contracts (TNCs). Each contract had a duration of 10 years. Learning from the lessons from the TNCs, Main Roads WA has developed new contracts called Integrated Service Agreements (ISAs). These allow Main Roads WA to regain much more control and influence on when and how the services are delivered. They incorporate features of alliance contracting such as risk sharing and outcome-based performance measures. The first ISA will commence in 2010.24 Key roads Acts are: Main Roads Act 1930. This Act establishes Main Roads WA as a corporate body and sets out

the powers and duties of the office. It is through this Act that the Department of Main Roads derives its authority to operate.

Road Traffic Act 1974. This Act provides for the issuing of driver’s licences and authorisations as well as the collection of motor vehicle licence fees.

Land Administration Act 1997. This Act is used for the dedication of roads, i.e. registration of a portion of land for a public road, which has the effect of vesting freehold land in the State.

Local Government Act 1995. Public Works Act 1902.

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The Australian Government has limited powers under the Constitution to regulate transport. However, it is involved in facilitating national regulatory consistency in roads, developing national transport networks, and providing specific road funding programs. Until 2009, Australian Government road funding was provided principally under the AusLink (National Land Transport) Act 2005 and, to a much lesser extent, under the Local Government (Financial Assistance) Act 1995 and the Federation Fund. However, in 2009, the Australian Government replaced the term AusLink in its land transport infrastructure funding program with the term Nation Building Program.b Key Australian Government funding components are: National Projects. These are targeted projects on the National Land Transport Network

designed to improve efficiency and safety. In WA over the 2008/09 to 2013/14 period, National Projects funding totalled $36.46 million for ongoing projects, $1,181 million for new projects, $147.5 million for off-network projects and $698.23 million for road maintenance programs.25

Roads to Recovery. This program addresses the problem of local roads reaching the end of their economic life, and their replacement being beyond the capacity of local governments. WA councils received $238 million for the period 1 July 2009 to 30 June 2014.26

Black Spot Program. This program improves the physical condition or management of hazardous locations with a history of crashes involving death or serious injury. WA black spot projects announced for 2010/11 totalled over $7.8 million.27

Financial Assistance Grants for roads. Annual Financial Assistance Grants for roads paid directly to WA local governments totalled $225.7 million in 2009/10.

1.2.3 Sector trends Increasing urban congestion Congestion of roads is a major problem that increases the time and cost of road tasks, reducing economic efficiency and liveability. The 2006 COAG Review of Urban Congestion Trends, Impacts and Solutions found that congestion imposed avoidable costs of $0.9 billion in Perth in 2005 and this is expected to increase to $2.1 billion by 2020.28 The vehicle kilometres travelled in Perth are projected to increase by 40% over the same period to reach 20.6 billion by 2020. This growth is likely to cause significant road congestion.29 The projected growth in congestion on Perth roads will be a result of: A forecast 23% increase in population to 2021, most of which will be experienced in the south

and south-west A forecast doubling in container freight to 2015 and quadrupling by 2030 A growth in the traffic tasks in the vicinity of the airport due to redevelopment of the domestic

and international terminals and non-aviation developments.30 The Royal Automobile Club of Western Australia identified Perth’s worst areas for congestion in 2009 and these are listed in Table 1.2. It shows that the majority of problems are located north of the river.

b The name change was announced at the Special Council of Australian Governments meeting on 5 February 2009, Council of Australian Governments, Communiqué, 5 February 2009, webpage, http://www.coag.gov.au/coag_meeting_outcomes/2009-02-05/index.cfm, accessed 9 August 2010.

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Table 1.2: Perth’s top ten congestion hot spots31

Red Spot Why it was nominated

Burns Beach Rd – Connolly Dve The merging of lanes at the intersection’s roundabout, combined with the volume of traffic, causes congestion.

Tonkin Hwy – Horrie Miller Dve High volume of traffic from the airport and industrial area; inadequate traffic lights system.

Beaufort St – Walcott St On-street parking blocks traffic flow and the traffic lights system is inadequate for the amount of traffic.

Gnangara Rd – Beechboro Rd A non-controlled intersection with heavy traffic including trucks.

Mitchell Fwy – Hepburn Ave Merging lanes can’t cope with the amount of traffic.

Joondalup Dve – Cheriton Dve A non-controlled intersection with high traffic volume.

Reid Hwy – Malaga Dve Long delays at the intersection’s traffic lights and a high volume of traffic.

Great Eastern Hwy – Roe Hwy Long delays at the intersection’s traffic lights and heavy traffic including trucks.

Reid Hwy – Alexander Dve Long delays at the intersection’s traffic lights and a high volume of traffic.

Reid Hwy – Mirrabooka Ave Long delays at the intersection’s traffic lights and a high volume of traffic.

The increase in congestion is reflected in the rising travel time of journeys in Perth. Main Roads WA figures show that on some of the most congested routes, drivers now spend up to 70% more time in their cars driving to work in the mornings than in the early 1990s. The time taken for trips during the morning peak period around Perth is shown in Figure 1.2. Figure 1.2: Journey time taken during morning peak period32

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Increased investment in State road projects There has been an increase in the amount invested in road infrastructure projects over recent years from all levels of government. Recent investment in roads by the WA Government includes: The $705 million New Perth Bunbury Highway completed in 2009 The $140 million second stage of the Karratha–Tom Price Highway, completed in August 2008 The $117 million Muchea to Wubin upgrade to the Greta Northern Highway The $107 million new Indian Ocean Drive The $160 million extension of the Mitchell Freeway to Hodges Drive, completed in November

2008 The $101.4 million 2.6km four lane dual carriageway including a bridge over the Swan River on

the Reid Highway, completed in 2010.33 Over the next four years to 2013/14, the State Government is expecting to spend $1.7 billion.34 Figure 1.3 shows Main Road WA’s asset investment program, which is focused on improving and expanding the road network. One major project underway is the Great Northern Highway Realignment, Port Hedland. This $200 million project will provide road improvements in anticipation of the growth of Port Hedland port. Figure 1.3: Main Roads WA’s Asset Investment Program (includes State and Australian Government funding)35

There are two large road projects where funds are being sought. They are the: Gateway WA, Perth Airport & Freight Access Project. The arterial road network surrounding

Perth Airport has experienced increased congestion over recent years. The WA Government identified the upgrade of these roads as an infrastructure priority in its submission to Infrastructure Australia in 2008 and 2009. The proposed project is focused on the stretch of the Tonkin Highway between the Great Eastern Highway and the Roe Highway in addition to the Leach Highway from Orrong Road to the airport. The project is expected to cost $600 million and be completed within five to seven years.36 Construction on the Gateway WA project is anticipated to commence in 2014 to enable completion before the proposed domestic and international airport terminal consolidation.37

Roe Highway Extension. This $550 million project would extend the existing Roe Highway from its current connection at the Kwinana Freeway in Jandakot to Stock Road at Coolbellup.

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Use of technology to improve road performance To optimise the performance of Perth’s major roads and obtain greater capacity from existing freeway infrastructure, Main Roads WA is pursuing the Managed Motorways initiative. This involves using technology to actively manage the roads through a suite of initiatives including variable speed limits, lane-use management, ramp signals, CCTV, and priority vehicle queue jumps. As well as reducing congestion, the initiative aims to reduce accidents and improve fuel efficiency by allowing more uniform traffic flow. The total amount of State and Australian Government funds allocated to this is $85 million until 2013.38 Grain road traffic growth The deregulation of grain exporting and lack of investment in grain rail lines has led to increasing volumes of grain being transported on the road network. The increased volume of heavy trucks is causing a jump in road pavement damage. The Western Australian Local Government Association (WALGA) has identified that steady growth in grain production (i.e. not assuming that the entire grain rail network is closed) will require local road upgrades of $433 million over 10 years to 2019.39

1.3 Performance

1.3.1 Road safety The quality of road infrastructure influences road safety. According to the Australian Transport Council, ‘improving the safety of roads is the single most significant achievable factor in reducing road trauma’. It notes that ‘road investment improves road safety through general road improvements – typically, “new” roads are safer than “old” roads – as well as through treatment of black spots’.40 In WA, road safety is managed through the Road Safety Council and the Office of Road Safety. The Road Safety Council comprises representatives from relevant State government agencies, the Insurance Commission, local government and the Royal Automobile Club of Western Australia. The Office of Road Safety supports the Road Safety Council in providing coordination and leadership in the areas of policy, research, education and road safety programs. The Road Safety Council has a road safety strategy entitled Towards Zero: Getting there together 2008-2020. The strategy aims to achieve a 40% reduction from 2008 levels by 2020 through encouraging and ensuring safer road use, safer roads and roadsides, safer speeds and safer vehicles.41 An estimated 25% of the improvement is forecast to come from improved infrastructure, including roadways and roadsides.42 The Office of Road Safety was transferred from the WA Department of Premier and Cabinet to Main Roads WA in the Transport Portfolio. A key indicator of road accidents is the fatality rate per 100 million vehicle kilometres. As seen in Figure 1.4, the fatality rate for WA has risen in recent years compared to the national average.

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Figure 1.4: Fatality rates on WA roads per 100 million vehicle kilometres43

Figure 1.5 shows the annual road deaths in WA over the last 10 years compared to the national figures. The annual WA road toll has ranged between 165 and 236. While the long-term national trend is reducing road deaths, the WA death toll is not following this same trend. Figure 1.5: Road deaths in WA and nationally44

For information on rail level crossing safety, see 2.3.7 Level crossing safety. In 2006 and 2007, major roads were assessed for safety by the ARRB Group for the Australian Automobile Association. A star rating was used, and any road that scores three stars or below is considered to be in need of remedial action to lift its safety performance. The rating system is based on assessing engineering features such as seal shoulders, skid resistance of pavements and degree of roadside clearance of obstacles. While the information is several years old, it is unlikely that there has been a significant change as the network has not deteriorated or improved markedly since then. The analysis shows that 9.9% of the network is rated two stars, 53.4% is three stars, 36.8% is four stars and no part of the network was rated either one or five stars.45 Figure 1.6 shows the results graphically.

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Figure 1.6: Road protection scores46

Black spot funding, which targets areas of high accidents, is appropriate for urban areas and some major rural intersections. However, such funding is not relevant to most rural roads where accidents can occur on long stretches of roads. In addition, the black spot funding is reactive rather than preventive. More attention is required to ensure that areas do not become black spots. A regular Main Roads WA survey of community satisfaction with road safety shows that there is currently high community satisfaction with road safety, as seen in Table 1.3. Table 1.3: Community satisfaction with road safety47

2005/06 2006/07 2007/08 2008/09 (actual)

2008/09 (target)

Community satisfaction with road safety 88% 95% 93% 97% 92%

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1.3.2 Road quality There are a number of indicators of road quality including ride comfort, asset age and maintenance, and these provide an indication of infrastructure quality. Ride comfort is measured by the International Roughness Index (IRI). When the IRI is less than 4.2, travellers consider it a smooth ride. Table 1.4 identifies the proportion of the State road network defined as smooth. Compared to the eastern States, the ride quality on WA roads has been consistently better.48 Table 1.4: Ride quality on State roads 2006 to 200949

International Roughness Index quality

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 (target)

Smooth travel exposure 98.2 98.4 98.4 97.3 97.5 97.5

The WA Auditor General noted in 2009 that while road surfaces may have remained generally smooth, the average age of the road network is steadily increasing, with nearly one third of the network having now reached the end of its design life.50 Over 25% of roads have not been resurfaced on time, which increases the risk that expensive rebuilding will be required due to road failure. Urban road surfaces are designed to last around 8-10 years and surfaces on rural roads about 15 years. The growth in the age of the surface on the State road network is shown in Figure 1.7.51 The Auditor General stated that WA roads are at an increased risk of structural failure because levels of planned maintenance have declined over the past 20 years. The report found that: Planned maintenance declined mainly because the road maintenance contracts did not

adequately specify the road condition measures required The estimated cost of eliminating existing overdue maintenance may exceed $800 million The cost of overdue resurfacing work is $270 million and this could rise to $437 million by

2012/13 A preliminary estimate in 2006 put the cost of overdue road rebuilding at $300 million Bridges are deteriorating and some are closed to heavy traffic; fixing all bridges has been

estimated at $250 million.52 In 2008/09, 94% of bridges in WA meet the Main Roads WA target for strength and 93.8% met the standard for width.53 Over 60% of the timber bridges are 50 years old compared to a design life of 60 years. It is estimated that over one third of timber bridges are three or more years overdue for scheduled repairs. A majority of WA’s concrete bridges are reaching the age where they may begin to deteriorate. Main Roads WA estimates that the cost of maintenance for State road bridges from June 2009 to June 2013 will be around $250 million.54

Figure 1.7: Age of the surface on the State-controlled road network55

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Another indicator of the quality of road maintenance is the community’s satisfaction with it. In 2008/09, Main Roads WA’s survey indicated that 94% of the community was satisfied with its road maintenance, significantly higher than its target of 70%.56 The quality of local government roads has also decreased due to a significant gap in funding between what is required to maintain the assets and what is actually being spent. The 2008 Report on Local Government Assets and Expenditure by the Western Australia Local Government Association (WALGA) identified this funding gap to be $142.6 million for that year. This gap indicates that the asset is being consumed faster than it is being renewed or replaced. The major contributing factor to the rising increase in this shortfall is that the cost of maintaining the road network is increasing at a faster rate than road funding. Road asset consumption is expressed as a percentage of the current replacement cost of the asset. In 2008, WA’s road asset consumption was 3.1%, which was worse than the national average of 2.7%.57 Local roads in WA are in a worse shape than the national average, as seen in the following measures: The written-down value over current replacement value is currently 61%, which is less than the

national local road average of 64%. For comparison, the figure for WA State highways and main roads is 64%.

The service potential remaining for road assets is 61% compared to the average of 64.2% The sustainability of sealed roads was 52.7% compared to 53.5% nationally. Sustainability is

calculated by dividing the sum of the maintenance and renewal expenditure by the life cycle cost.

The shortfall between the preservation needs and the actual expenditure is increasing, as seen in Figure 1.8. The annual cost of maintaining the network is $473 million, but only $331 million is being spent on it.58 This growing gap is despite an increase in local government road expenditure by 34%59 between 2003/04 and 2007/08, as seen in Table 1.5. The gap is increasing because the cost of maintaining the road network is increasing at a faster rate than road funding. Between 1998/99 and 2007/08, the required expenditure on preservation increased by 75%, while road funding increased by only 63%.60 Generally, local government roads in metropolitan areas are in much better condition than in non-metropolitan areas. This reflects the greater capacity of metropolitan areas to internally fund the shortfall between road preservation needs and the road grants that they receive.61 Over ten years, the WALGA estimates that there will be a $1.4 billion gap in funding.62 Figure 1.8: Shortfall between road preservation needs and expenditure for local government roads63

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Table 1.5: Expenditure on maintenance, renewal, upgrading and capital expansion on local roads ($ million)*64

Category 2003/04 2006/07 2007/08 Change

Maintenance and renewal of existing roads

251.6 313.4 334.6 +33.0%

Upgrading and capital expansion 119.3 137.3 163.9 +37.4%

Total expenditure 370.9 450.7 498.5 +34.4%

Upgrading and capital expansion 32.2% 30.4% 32.9% * Of their road expenditure, local governments spend about 37% on maintenance, 30% on renewal, 26% on upgrades and 7% on expansions.65

It is also likely that the quality of DEC-controlled roads is also declining. While the exact magnitude of the problem is unknown due to the lack of data, given the size of the network and the limited expenditure on it, it is likely that there is a significant backlog of work required to maintain the network at its current level.66

1.4 Future challenges The future challenges to achieving improvements in road infrastructure are: Closing the funding gap for local government and State-controlled roads. The gap is

widening between what funds are required to maintain and improve local roads, and what is actually being spent. Funding is required to close the gap, with specific attention given to renewing and upgrading bridges on local roads, and facilitating the use of high-productivity vehicles.

Improving road efficiency measures. Improving road asset utilisation rather than building new roads is an important approach to getting value for money from road investment. Ways to improve efficiency are targeting road works on points of connection, building links between existing road networks, minimising the impact of road works, ensuring quick clearance of traffic incidents, improving traffic signal coordination, and prioritising road space for high occupancy vehicles or ‘high value’ movements.

Rebuilding technical expertise within the transport portfolio including Main Roads WA. Following the outsourcing of asset management and maintenance in the late 1990s, much technical expertise from Main Roads WA was transferred to contractors. As a result of the new Integrated Service Agreements, Main Roads WA needs to increase its technical expertise to be able to work effectively alongside the contractors.

Better managing freight transport. The road freight task is increasing. This task needs to be managed effectively if economic efficiency is to be maintained. At the same time, this increase is causing significant road damage and social impacts. While there needs to be improvement in freight efficiency, such as by improving freight corridors, there also needs to be greater consideration of the broader economic and social impacts of increased freight movement. The costs include increased pavement damage, urban congestion and reduction in the quality of life of those living along freight corridors.

Responding to the growth of bulk freight on roads. The transfer of bulk freight transport from road to rail is having an impact on the local roads and the community via increased road traffic. Currently, there are no arrangements to allow local governments to recover the cost of road damage from the increasing number of trucks, nor to mitigate the impact on the community. Developing the optimal mix of road and rail for bulk freight movements, and ensuring the relevant component of ‘user pays’ in funding the infrastructure and/or appropriate apportionment of road usage revenues, will need to be addressed.

Determining an appropriate road pricing mechanism. Freight and passenger vehicles trips are increasing at a much faster pace than road provision. Consequently, better methods to improve road efficiency and moderate demand are required. One effective way to do this is through appropriate road pricing. This may include a road usage charge that combines congestion costs, road damage and environmental and other secondary damage impacts.

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Other mechanisms include implementing Transport Oriented Developments, encouraging local employment, public transport, cycling/walking, and the Managed Motorway initiative.

Addressing rising expectations of a seamless transport network. The community and business expects an integrated multi-modal transport network that has good accessibility and reliability and is delivered effectively. Given the legacy nature of transport infrastructure, meeting these expectations will be difficult in the short and medium terms.

Responding to the need for heavier pavements. With increasing traffic volumes and heavier vehicles, heavier pavements need to be constructed, particularly on urban freight routes. These pavements have a lower total lifecycle cost, but are expensive to construct and thus additional funding will be required for road construction in the short term.

Delivering integrated land-use and transport planning outcomes. Implementing integrated plans will require overcoming the following major challenges: Ensuring that land-use decisions to slow the growth in urban boundaries, reserve land

corridors for future roads, and focus on building in designated growth corridors, are maintained over many decades

Increasing significantly the amount of funding for both new roads and maintenance Designing land use to minimise the need for journeys, including those travelling to local

employment. Increasing the role of rail transport. See Rail section. Improving the efficiency of intermodal facilities. See Rail section.

1.5 Report Card rating

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Roads overall C+ Not rated C Not rated

National roads B- B- C+ C

State roads B- B- C C-

Local roads C- C+ C- D

These ratings recognise that there have been improvements to national roads, maintaining their high standard. While there has been significant capital expenditure on State roads, road capacity expansions have not kept pace with the growth in both freight and passenger demand. Maintenance and renewal expenditure is inadequate to maintain the quality of the existing State roads. Local roads have deteriorated due to insufficient maintenance and renewal expenditure. Insufficient effort has been given to reducing road demand through shifting road usage to rail freight, public transport, and cycling/walking. Positives that have contributed to the rating are: Commissioning and completion of major road projects such as the Perth Bunbury Highway Improved collection of road asset information.

Negatives that have contributed to the rating are: Increasing travel time and congestion on metropolitan roads Declining road quality for both State-controlled and local government roads Insufficient investment in maintenance and renewals on both State and local roads resulting in

a large backlog of work Increasing road freight causing a substantial increase in pavement damage and contributing to

congestion and loss of economic efficiency Lack of integrated road and rail plan for grain transport.

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2 Rail

2.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Rail C+ C+ C- D-

This rating recognises that the metropolitan network has continued to improve, but problems exist, including overcrowding at peak times and insufficient station car parking. The regional rail network has contracted in the South West Land Division, parts of the grain network require substantial maintenance to maintain their load capacity and on-going viability, and there is a lack of long-term certainty over parts of the network. Problems exist with the interstate network and the connection to ports and intermodal facilities, meaning that road transport is increasing its competitiveness over rail. The Pilbara lines continue to be of a high efficiency, reflecting both their recent construction and high design standards, as well as operating as part of a vertically integrated supply chain. Since the last Report Card, the major rail sector developments have been: Continual strong growth in metropolitan rail patronage Improvements in Transperth punctuality, but still not achieving performance targets Major line extensions in the metropolitan network Incremental improvement in regional rail infrastructure, excluding grain lines.

Recently completed and in-progress major infrastructure projects include: Southern Suburbs Rail (Mandurah line) in 2007 Cloudbreak Pilbara line in 2008 Perth City Link Project Butler $240 million project to extend the Joondalup line 2011 to 2014.

Challenges to improving rail infrastructure in WA include: Addressing inadequate mass transit services to Perth’s north-east Increasing the capacity of passenger rail services servicing Perth’s south and south-east Determining the future of grain lines Provision of intermodal terminals Increasing rail freight Facilitating the development of new rail lines and access to existing ones for resource

operations.

2.2 Infrastructure overview

2.2.1 System description The WA rail network consists of: Metropolitan passenger network WestNet Rail network, which carries freight and regional passenger services, and has

dedicated grain lines

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Australian Rail Track Corporation (ARTC) segment (Kalgoorlie to WA/SA border), which is part of the interstate network known as the Defined Interstate Rail Network (DIRN)

Pilbara private railways. Figure 2.1 identifies the rail networks in the south of WA. These railways use one of two gauges – standard gauge (i.e. 1,435mm or 4’8½”) and narrow gauge (i.e. 1,067 mm or 3’6”). Figure 2.1: Railways in the south of WA67

Metropolitan network Perth’s passenger rail services play less of a role in transporting the city’s population than in the east coast capital cities. This is because Perth has a low urban density (1,090 people per km2 in Perth compared to 2,058 people per km2 in Sydney), a good road network and high car ownership, all of which contribute to a higher car use. Transperth rail services are part of an integrated train, bus and ferry public transport network, centrally-controlled, planned, marketed and coordinated by the Transperth division of the PTA. The 173.1km standard gauge network consists of five electrified suburban rail lines that service five of the city’s six growth corridors. They are: Joondalup line (33.2km) Fremantle line (19km) Midland line (16km) Armadale/Thornlie line (30.5km, and a 3km spur line to Thornlie) Mandurah line (71.4km).68

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There are 70 stations on the network and the spacing of stations varies depending on when lines were built, as seen in Figure 2.2. The older rail lines, which date back to the 1880s have closer station spacing, while the two new lines (Joondalup completed in 1993 and Mandurah line completed in 2007) built over the last two decades have medium to long station spacing. The longer spacing of stations has meant that passengers travel by car or bus to the station rather than walking. This has placed a greater premium on the provision of ‘park’n’ride’ station car parks and integrated bus services for stations on the newer lines. At 30 June 2010, there were about 17,000 parking bays across the system (Joondalup line 6,620 bays, Mandurah line 6,300 bays, Armadale line 2,346 bays, Midland line 1,469 bays and Fremantle line 545 bays).c The urban network is largely separated from the freight rail network with the most significant conflict at Fremantle. This separation significantly improves the reliability and punctuality of rail services and eliminates delays to freight rail services. Figure 2.2: Transperth Network Map

The network operates a fleet of 222 railcars as of 30 June 2010 that are maintained, cleaned and stowed at depots in Claisebrook, Mandurah and Nowergup. There are two types of trains operating on the network:

c A consequence of the increase in parking bays at station is that it results in more rail passengers, but a commensurate drop on buses, Public Transport Authority, Transperth Buses, webpage, http://www.pta.wa.gov.au/Portals/0/annualreports/2007/transperth_007.html, accessed 9 August 2010.

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A-series. Introduced in 1992 and 48 of these two-car sets can be coupled as two or four-car sets. Their top speed is 110kmh.

B-series trains. Introduced in 2004, these trains consist of three connected carriages that can be coupled as three, or six-car sets. Their top speed is 130kmh. As at 30 June 2010, there were 42 B-series trains in service.69

The most recent expansions to the network were: Extension on the Joondalup line to Clarkson, completed October 2004 Construction of a new spur line to Thornlie, completed August 2005 Construction of the Mandurah line, completed in December 2007.

The above expansions, together with the completion of the Nowergup Depot and the purchase of 31 B-series trains, are collectively known as the New MetroRail project, which cost $1.6 billion. In 2007, Transperth introduced a contactless electronic ticketing system called SmartRider. The systems uses smartcard technology incorporating an embedded microchip and an aerial to enable the smartcard to communicate with processors located on board Transperth buses and ferries and at train stations. Passenger growth has increased by 72.5% over the last five years since 2004/05, with the total number of passengers over 2009/10 being 56.4 million.70 A significant contributor to the growth was the opening of the Mandurah line in December 2007. Passengers can be divided into paying and non-paying. Non-paying customers are those who travel within the Free Transit Zone within the Perth city boundaries (i.e. journey starts and finishes between the Claisebrook, McIver, Perth and City West stations), or belong to a concessional group such as the WA Seniors, Disability Support Pension cardholder or children under five years old. Figure 2.3 shows the patronage growth over the last six years. Figure 2.3: Transperth train patronage (millions)

Capital works projects are the responsibility of the PTA’s Network & Infrastructure Division. Recent major rail infrastructure projects have been: Upgrade of Kelmscott Station train/bus interchange completed for $12.9 million Continued work on a major detailed conservation and restoration program at Fremantle Station Car park expansion project along the Joondalup and Mandurah lines. This $50 million, four-

year project involves building at least an additional 3000 car bays on the Joondalup and Mandurah lines.

Trackwork resleepering. Completed a five-year program of replacing deteriorated wooden sleepers with concrete sleepers over the entire urban network.71

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Committed rail infrastructure projects are: Perth City Link/Northbridge Link project. This $600 million project involves sinking Perth's

central train station and building a 1.1 hectare town square as part of a 13.5ha redevelopment that will include retail, business and residential areas. The project will take four years to complete.72

Extension to Joondalup line 7.5km north of the existing Clarkson station to Butler (Butler Extension Project). This project is scheduled to begin in 2011, with completion in 2014.

Construction of a specialist rail training centre at Kwinana, south of Perth. Accessible Upgrade Program. This $21.2 million project will provide accessibility upgrades to

11 railway stations. Improved Parking Facilities Program. This $28.2 million project will improve parking facilities at

stations on the Joondalup and Mandurah lines. Rail Stations Program. This $42.1 million project will upgrade several stations on the Armadale,

Midland and Fremantle lines.73 WestNet Rail WestNet Rail operates the non-metropolitan, southern WA rail network under a 49-year long-term lease signed in 2000 by the WA Government. WestNet Rail is obliged to provide above-rail access to the network under the terms of WA’s Rail Access Regime administered by the Economic Regulation Authority. It is also responsible for the below-rail infrastructure. Under the lease agreement, WNR may return to government control any line sections that are demonstrably non-commercial.74 The network carries both regional passenger services and freight. Its 5,100 route kilometres of lines carry in excess of 270,000 train movements and over 50 million tonnes of freight each year. In declining order, its major freight tasks in million tonnes are iron ore (10.3), alumina (10.3), bauxite (8.5), grain (7.5), interstate freight (4.5) and coal (1.6).75 Regional Passenger Rail Network TransWA operates regional rail services on the WestNet lines. It also operates a large road coach network throughout regional WA. TransWA is a division of the PTA. It operates 62 scheduled diesel rail services every week across the four routes, as illustrated in Figure 2.4. Australind – two daily return services between Perth and Bunbury Prospector – a daily return service between Perth and Kalgoorlie, and an additional service on

Mondays and Fridays AvonLink – a weekday return service between Midland and Northam MerredinLink – a service operating three times per week between Perth and Merredin.

There were more than 241,000 TransWA rail boardings in 2009/10, down slightly from 246,000 in 2008/09. 76 Figure 2.5 shows that Australind is the TransWA’s most popular service. The reasons for the overall patronage decline included the general economic downturn, a $500 State Government fuel rebate to people in regional areas, and the opening of the new Bunbury Highway. Current improvements to TransWA’s services include developing a preventive maintenance program to increase reliability and reduce costs, refurbishment and modifications to the Australind and Prospector railcars, and construction of a security compound in Kalgoorlie for overnight stabling of the Prospector.77

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Figure 2.4: TransWA regional passenger rail service map78

Figure 2.5: TransWA train patronage79

Grain freight lines The WestNet Rail freight network consists of about 2,155 route-kilometres dedicated narrow gauge grain lines. Grain is also carried on much of the multi-user network. Around 60% of the State’s average annual grain production (around 10 million tonnes) is carried by rail to the Geraldton, Esperance, Albany and Fremantle ports. About 90% of all grain produced in WA is exported. About every 10 to 15 years, the network requires a major resleepering program to enable it to continue to operate. Such a renewal cycle is required to commence in the near future to ensure that line section speed standards are retained. To delay this resleepering will result in line speed reductions and ultimately the closure of these lines. In 2009, the resleepering program for all grain lines was forecast to cost $258 million. The proportion of grain carried on the railways has been declining in recent years as grain has shifted to road transport for cost and flexibility reasons. This transfer has not only put pressure on the viability of some grain railways, but also accelerated road damage due to the heavy grain trucks.

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The 2009 Strategic Grain Network Review identified that given current trends, rail services are likely to cease on several lines, notably Quairading, Kulin, Kondinin, Corrigin and Yealering. It also noted that: Parts of the rail network, both currently and for the foreseeable future, are uncompetitive with

road, and recommended that resleepering work that needs to be done should not occur, meaning that the lines should ultimately close

Some $164 million investment by Government is required for resleepering to keep rail services viable in the Albany and Kwinana North zones

No public investment is required in the Geraldton zone, as the line is viable due to its potential volume of non-grain freight

A $15 million public investment in longer sidings and fast train loading is required to keep the Kwinana South zone grain on rail.80

To identify which lines should close, the Strategic Grain Review divided the grain rail network into three tiers, as seen in Figure 2.6. The most important and viable is Tier 1. Tier definitions are: Tier 1 (979km) – the core line sections that form the basic structure of the network, mostly

carrying heavy volumes and providing locations for the capture of grain to rail from the outer grain production areas. (The study excluded those multi-purpose lines that had an assured future.)

Tier 2 (420km) – branch lines where rail services are viable, based on current access rates and above-rail costs, but where an investment choice is required. The choice is between periodic rail resleepering and the upgrade of road network.

Tier 3 (755km) – branch lines where volumes are low and/or rail services are already uncompetitive with road transport, and are not candidates for reinvestment.81 The majority of these lines only operate at a maximum speed of 30km for loaded trains.

Figure 2.6: Rail network showing Tiers 1, 2 and 3 lines (excluding multi-user lines with an assured future)82

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The priority investment project on the grain network is the resleepering of the Avon to Albany rail. This $43 million project would remove the speed restrictions and stop the progressive deterioration of that line. It would take between 12 and 18 months to complete. This project is close to commencing. The WA Government has stated that no rail lines in the grain freight network would close in the 2010/11 financial year.83 The May 2010 WA budget included a statement that more than $80 million will be invested in the State's grain freight network while it continues to develop a long-term business case to address deficiencies in the network.84 This investment includes funds from WestNet Rail, the State and Australia Governments. Bulk freight lines The non-grain specific narrow and standard gauge lines (approx 3,000 route kms) carry a range of bulk freight including alumina, bauxite and coal in the south-west, iron ore in the mid-west and nickel, mining inputs and iron ore in the Goldfields–Esperance region. WestNet Rail has recently invested over $100 million to provide concrete resleepering to the rail line between Kwinana and Bunbury. WestNet Rail in conjunction with an industry partner has invested over $130 million to strengthen the line between Kalgoorlie and Esperance through rerailing and resleepering. The last few years have seen investment in the Eastern Goldfields Railway, which has included: $33 million to replace the final 76km of timber sleepers between Koolyanobbing and Kalgoorlie

with concrete sleepers. $12 million to extend eight crossing loops to accommodate 1,800m-long trains. The crossing

loops are at Bodallin, Darrine, Wallaroo, Lake Julia, Grass Valley, Bungulla, Booraan and Seabrook.

$95 million Australian Government funding announcement through the 2010 Infrastructure Australia Building Australia Fund for the replacement of 185km of rail and two additional crossing loops to deliver an improvement to rail users and achieve the Defined Interstate Rail Network (DIRN) between Perth and Kalgoorlie.

In 2008/09, the WA Government committed nearly $20 million to an upgrade of the line between North Greenbushes and the Port of Bunbury to re-establish a rail freight service to transport plantation logs.85 ARTC section The interstate rail network east of Kalgoorlie to the WA border is managed by the Australian Rail Track Corporation (ARTC). ARTC is responsible for capital investment in the corridor, management of infrastructure maintenance, and selling access to train operators. ARTC has a wholesale agreement with WestNet to allow it to negotiate access to this segment, thus allowing it to provide a one-stop approach to access the DIRN. However, no rail operators have ever entered into an access agreement with ARTC for access to the DIRN in WA. ARTC understands that this is largely because rail operators would prefer to contract directly with the entity responsible for maintaining and controlling the network.86 Metropolitan Rail Freight Network Freight traffic through Perth is carried on lines separate from the passenger network. In 2002, the Metropolitan Freight Network Strategy was produced with one of its key aims to transfer freight from road to rail. It led to a number of projects having major rail components including: North Quay Rail Loop and Terminal. Completed in 2006, it resulted in a significant increase in

the use of rail to move containerised cargo to and from the Inner Harbour.87

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Develop Kewdale Intermodal Terminal Kewdale-Hazelmere Integrated Masterplan Midland Rail Realignment Study Upgrade of the Kewdale line for double stacking Trial of new technology for rail freight Kwinana Container Terminal.88

An objective of the WA Government is to move 30% of containers carried by rail from Fremantle Port by 2013. Railing containers reduces road congestion at North Quay. The 2009/10 rail freight share was around 10.5%.89 The largest intermodal rail facility in Perth is the Kewdale Freight Complex. Access to the terminal is via a single standard gauge track. Due to growth at the terminal, it is currently being redeveloped by Pacific National with further expansion planned through development of a third common-user terminal. The PTA is spending $18 million to provide power, water and sewerage services as well as the creation of drainage basins, new entry roads, and demolition works.90 In addition, QR National recently redeveloped a section of the Forrestfield Rail Yards into an interstate intermodal terminal as part of its shift into the east-west container market. Pilbara railways There are currently five rail lines in the Pilbara as seen in Figure 2.7. They are the: Mount Newman and Mount Goldsworthy rail lines owned by BHP Billiton Iron Ore (BHPBIO) Robe River Railway (also known as the Deepdale railway) which runs from Mesa J (Deepdale)

mine site to Rio's port at Cape Lambert. Tom Price Railway. The main part of the railway connects the Dampier port with the Tom Price

mine and was built in 1966. Since then, spur lines and line duplications have been built to Paraburdoo, Marandoo, Brockman and Yandi mines.91

Cloudbreak rail line. This 280km line carries ore from the Cloudbreak Mine to the Herb Elliott Port. It is owned by the Fortescue Metals Group’s (FMG) wholly-owned subsidiary, The Pilbara Infrastructure (TPI).92

In 2002, the railway operators for Hamersley Iron and Robe River Iron's railway operations were combined to form Pilbara Rail. Each line services the owner’s mines and is an integral component of their supply chain that carries the minerals from mines to ports. They are all standard gauge railways. The railways are highly mechanised and efficient. For instance, each of Rio Tinto Iron Ore’s trains is operated by a single driver and comprises up to 234 ore cars, making it about 2.4km in length. A fully loaded train weighs approximately 29,500 tonnes. There is a train movement almost every 25 minutes along the line.93 The Pilbara region exported some $26.8 billion94 of minerals in 2009. All of the lines were built before 2000 with the exception of the Cloudbreak rail line. This 256km railway was built between 2005 and 2008. The railways expand as required by their owners to access new resources. For example, a 49km rail extension of Deepdale railway was commissioned in 2010 to connect it to the Mesa A/Warramboo mine.95 In 2008, Rio Tinto announced that it was moving to automate its Pilbara railways, meaning that driverless trains will be operating on most of its 1,300km network within five years. This, it is claimed, will result in the world’s largest automated train network.96 The drive for rail automation is part of a broader mine automation agenda, which includes driverless trucks, remotely operated drilling and blasting, remotely operated crushers, and remote train loading.

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Another trend in the operations of these railways is the development of control centres in Perth. These coordinate all elements of the mine to port supply chain. In July 2010, Rio Tinto Iron Ore’s opened its Perth operations centre. This centre coordinates the entire supply chain from mines to ports, and houses 200 controllers and schedulers and more than 230 technical planning and support staff.97 Figure 2.7: Pilbara Iron Ore Railways98

2.2.2 Policy and governance The WA Government has a range of broad policy objectives for rail. For metropolitan rail, the objective is to provide accessible, reliable and safe rail services as well as the protection of rail corridors and railway infrastructures for future need. For metropolitan freight, the objective is to shift freight from road to rail. The objective for the regional rail network is to provide cost effective freight services and public transport. While the major regional rail lines are secure, there is uncertainty about the future of a number of grain lines. The WA Government is yet to develop a position on the long-term future of these lines. For the Pilbara railways, a long held objective by WA Governments has been to ensure that there is fair and reasonable third party access to the Pilbara railways. The benefits of third party access would be: Extending the life of the Pilbara resource base by increasing blending opportunities Making previously ‘stranded’ tenements commercially viable Maximising export tonnages, without a significant reduction in the global price of iron ore Improving global competitiveness by reducing rail transport costs, which are estimated to have

an after-tax net present value of $500 million Minimising the environmental impact of mining operations in the Pilbara.

Despite numerous consultations, inquires, access regimes, court cases and draft rulings over the last decade, to date there has been no fully-independent third party that has gained access to the railways.99 The most recent ruling in June 2010 by the Australian Competition Tribunal states that Hamersley and BHP Billiton’s Mt Newman private railways should not be declared open because they are heavily used and the costs of access would be contrary to the public interest, while the two smaller, less-used railway lines (Goldsworthy Railway Service and Robe Railway Service) should be declared open.100 While this decision will benefit some smaller iron ore players such as Atlas Iron and Aquila Resources, it will not benefit Fortescue, which wants to access to Rio's Robe line so that it can transport iron ore from its Solomon deposit to a planned port at Anketell. However, it

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is likely that third parties will not gain access to the declared railways in the near future due to further legal actions. The Cloudbreak rail line has been included in the WA rail access regime since 1 July 2008.101 Atlas and BC Iron have negotiated infrastructure access with Cloudbreak’s owner, Fortescue.102 Key railway legislation consists of: Government Railways Act 1904 Rail Freight System Act 2000 Rail Safety Act 2010 Railways (Access) Act 1998.

2.2.3 Sector trend Mid-west railway construction and expansion of the Pilbara railways The growth in mineral demand is driving the development of new rail lines as they offer the most cost effective transport mechanism. There are a number of rail projects proposed for WA with the most advanced being the 570km rail lines to connect the deep water port at Oakajee, 25km north of Geraldton with iron ore mining operations in the northern mid-west. The PTA will own the rail infrastructure. Oakajee Port and Rail (OPR) will design, construct, commission and operate the rail network. OPR is a joint venture between Murchison Metals Ltd and Mitsubishi Development Pty Ltd, each of which has a 50% economic interest in OPR. Construction of the project is scheduled to start in 2011 and should be completed by 2014.103 This route for the railway will be selected using state-of-the-art geometry alignment to maximise fuel efficiency. WestNet Rail is also planning to spend around $450 million to significantly upgrade existing railway infrastructure for the southern mid-west mines. This project involves constructing a dual gauge rail line with greater capacity from Morawa to Mullewa and upgrading the rail line between Mullewa and Geraldton Port to enable early export by southern mid-west miners. Once Oakajee Port is built, these initial tonnes can then transition from the WestNet Rail network to Oakajee Port through either a dual gauge connection from Narngulu or from a point west of Mullewa. Other advanced projects include a Hancock Prospecting proposal to develop a 300km rail line from its Roy Hill iron ore project to Port Hedland, and a 275km railway connecting the proposed Anketell port with mines near Pannawonica. Incremental improvement of the metropolitan network Population growth and increasing travel per person is escalating the need for more public transport. This will drive the continual improvement in rail services. Growth in interstate rail freight Forecasting future freight demand depends on assessing the future attractiveness of rail compared to other modes (road, sea and air) in terms of its price, availability and reliability, as well as considering the probability of major new projects commencing. Historically, the ARTC has based its growth forecasts on historical rates of growth in demand, plus 1% to 2%, and a broad continuation of historical rail market share.104 However, the ARTC considers that rail freight attractiveness will rapidly change in the future due to: Continued rising fuel costs in real terms Continued rising labour costs in real terms, in particular for long-distance truck drivers Introduction of a carbon trading scheme Introduction of mass-distance charging for road access Increased urban congestion

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Continued rising demand for coal Continued rising demand for other Australian minerals.105

The ARTC has developed projections for rail share, using a low base and high growth scenario, to 2017/18. Figure 2.8 presents these projections for various ARTC rail paths using 2004/05 as the base year. Figure 2.8: Predicted growth in ARTC paths106

2.3 Performance Railway operational performance is measured by a number of indicators. Each reflects to some degree the quality of infrastructure, but it is difficult to isolate its exact contribution. Indicators where infrastructure makes a significant contribution are: On-time running, which measures the percentage of peak services that arrive within a certain

time of the published timetable time Reliability, which measures the proportion of the timetabled peak train services that have

completed their runs Track condition index, which is a weighted mean of track condition for track line sections Level crossing accidents and derailments, which are measures of safety Environmental outcomes.

2.3.1 Passenger service performance Passenger service performance targets are primarily based on: Punctuality (on-time running), measured as the percentage of the services arriving on time at

specified monitoring points Reliability, measured as a proportion of the timetabled train services that have completed their

runs. On-time running is reported as the percentage of journeys arriving at their destination within a certain time of the published timetable time. The factors that affect on-time running targets are: Train mechanical problems Signal, track, level crossing and points problems Vandalism Passenger or staff illness or injuries

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Passenger inability or unwillingness to board and alight quickly Extreme weather conditions such as storms and heat waves Police operations, fatalities and bushfires Crossing of trains with other track users Track closures due to maintenance Track speed restrictions.

Table 2.1 details on-time running for Transperth and TransWA services. The on-time running for metropolitan trains has been improving over the last five years and nearly reached the target in 2008/09. Country services have achieved their performance targets for the last few years with the exception of the MerredinLink. Table 2.1: On-time running performance for WA passenger train services, 2004/05 to 2009/10107 108

Service provision 04/05 05/06 06/07 07/08 08/09 09/10 Target 09/10

Metropolitan

Metropolitan trains train arriving within four minutes of scheduled time (%)

95 87 87 91 95 96 95

Country services

Prospector arriving within 15 minutes of scheduled time (%)

44 73 77 42 77 72 80

Australind arriving within 10 minutes of scheduled time (%)

65 88 92 83 82 95 80

AvonLink arriving within 10 minutes of scheduled time (%)

99 99 99 99 99 98 95

MerredinLink arriving within 10 minutes of scheduled time (%)

52 89 89 84 83 87 95

The PTA undertakes a survey of users to determine their satisfaction with rail services. Called the Passenger Satisfaction Monitor (PSM), it reports on a range of key service characteristics and the importance and satisfaction of each are listed in Table 2.2.

Table 2.2: Passenger satisfaction results for Transperth

Service Characteristic Importance Rating Satisfaction Rating

2009 2010 2009* 2010

Cost of fares 68% 74% 66% (7%) 67% (10%)

Cleanliness on board 64% 67% 86% (5%) 88% (5%)

Speed of the trip 60% 67% 93% (3%) 93% (3%)

Punctuality 64% 66% 94% (2%)

Availability of seats 59% 63% 77% (17%) 78% (14%)

Weekday service frequency 49% 58% 85% (5%) 84% (6%)

Peak service frequency 49% 51% 81% (12%) 84% (7%)

Provision of electronic ticketing facilities/SmartRider electronic ticketing

42% 37% 93% (4%) 94% (2%)

* Note: Dissatisfaction level shown in parentheses.

The survey’s aggregated service characteristics result in an overall satisfaction rating, which has hovered around 90% for the last few years and jumped quite sharply to 93% in 2009/10 as shown in Figure 2.9. The target of 92% was not achieved due to passenger concerns about safety on and around trains at night, overcrowded trains, and issues relating to fare costs.

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Figure 2.9: Level of overall customer satisfaction with Transperth trains109

In 2009, the Royal Automotive Club conducted a survey of Perth’s public transport system and it identified that 34% considered that the system had improved over the previous 18 months compared to 13% who said it was worse.110 Table 2.3 identified the greatest concerns for train travellers. Table 2.3: Royal Automotive Club 2009 survey of Perth’s train travellers’ greatest concerns111

Concern 2008 2009

Overcrowding 71% 55%

Lack of parking at train stations 47% 46%

Personal safety 26% 39%

Poor connections na 28%

Service is not frequent enough 31% 23%

Surveys were also undertaken for the Australind, Prospector, AvonLink and MerredinLink services. The overall service results are shown in Figure 2.10.

Figure 2.10: Level of overall customer satisfaction with TransWA rail services112

Due to a substantial increase in patronage, the Mandurah and Joondalup lines are reaching their capacities during peak hours, as are their car parks. The solution to this has been to increase the number of railcars and to build more car parks.113 Unlike in Melbourne and Sydney where there is little capacity to increase rail services without building more tracks, Perth is in the position of being able to achieve a 150% growth in passenger numbers by simply adding new rolling stock.114 However, once capacity is reached, which will not be for many years, there are no preserved corridors for building additional train lines, and further expansion of the network will need

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considerable tunnelling or land resumption. There is also a limit on station capacity in the Perth CBD and limited ability to operate part journeys on the linked Joondalup and Mandurah lines.

2.3.2 Grain network performance The majority of the grain rail network is in need of cyclical resleepering. This is reflected in the restrictions on train operating speeds on a number of grain lines, as seen in Table 2.4. However, the PTA’s independent audit of the lease arrangement under which WestNet Rail operates confirmed that it is meeting its commercial and maintenance obligations.115 Table 2.4: Grain line track specifications116

Line section Section length (Km

Axle load Performance (loaded)

19 tonne

16 tonne

70kph 60kph 50kph 40kph 30kph

Wagin to Albany 237 Y Y

Wagin to Lake Grace 119 Y Y

Katanning to Nyabing 61 Y Y

Tambellup to Gnowangerup 38 Y Y

Hyden to Lake Grace 94 Y Y

Newdegate to Lake Grace 72 Y Y

Bullaring to Merredin 134 Y Y

Yilliminning to Bullaring 60 Y Y

Narrogin to Yilliminning 23 Y Y

Kulin to Yilliminning 95 Y Y

Kondinin to Merredin 140 Y Y

York to Quairading 74 Y Y

Narrogin to Avon 176 Y Y

Trayning to Merredin 73 Y Y

Amery to Mukinbudin 154 Y Y

Amery to Kalannie 98 Y Y

Burakin to Beacon 71 Y Y

Goomalling to McLevie 137 Y Y

Maya to Perenjori 56 Y Y

Toodyay to Miling 135 Y Y

Avon to Amery 89 Y

2.3.3 Regional rail network Excluding the grain network, the regional rail network is in reasonable condition although there are areas of speed restrictions, such as Kalgoorlie to Esperance, and potential future capacity constraints, such as Brunswick Junction to Bunbury Port.117 The duplication of the Brunswick to Bunbury port section of the line and rail upgrades to accommodate more frequent rail services and heavier trains along the main feeder lines in the south-west region will be required as traffic reaches capacity.

2.3.4 Interstate line The quality of the main interstate segment between Kalgoorlie and Avon has been slowly improving over the last few years, as seen in Figure 2.11. This is primarily due to the capital investment spent on this part of the line.

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Figure 2.11: Track Quality Index for interstate segment – Kalgoorlie to Avon118

2.3.5 Pilbara rail lines’ performance The Pilbara lines claim to be the most efficient in the world with their single driver operation carrying extremely heavy and long trains.119 A major contributing factor for this is their use of technology. For example, the Cloudbreak railway uses specially profiled concrete sleepers and continually welded rail, resulting in the line having the highest axle load (40 tonne) in the world.120 Another opportunity for efficiency is the use of driverless trains, which is currently being developed for the Rio Tinto Pilbara railways.

2.3.6 Derailments The quality of the rail network is reflected in the number of derailments. WA’s rail networks experienced 167 derailments between January 2001 and June 2009.121 Converting this figure to derailments per million kilometres travelled, WA’s level of derailments per distance travelled is below the national average, as seen in Table 2.5. Table 2.5: Train derailments per million kms travelled, 1 January 2001 to 30 June 2009122

Period NSW Qld WA Tas Vic NT SA

January 2001 – June 2009

0.90 0.96 0.82 10.20 0.53 1.61 1.27

Another indicator is the number of serious rail accidents per million train kilometres travelled. A serious rail accident is one that involves a death, serious personal injury or a derailment. Table 2.6 shows that the target has not been achieved consistently in the last five years. Table 2.6: Number of serious rail accidents per million train kilometres travelled in WA123

05/06 06/07 07/08 08/09 09/10 2010/11 (target)

Number of serious rail accidents per million train kilometres travelled

3.99 3.36 4.23 3.8 4.36 3.3

2.3.7 Level crossing safety Level crossings can be controlled through either passive or active control systems. Passive control systems alert road users through signs and road markings of an approaching level crossing. Active traffic control systems alert road users through flashing lights and sounds that are triggered by approaching trains. For high risk level crossings, Active Advanced Warning Systems can be installed that alert road users of approaching trains up to 200 metres before the crossing. There are 1,251 rail level crossings in WA that have passive or less protection.124 There have been 33 road vehicle collisions at WA level crossings between 1 January 2001 and 30 June 2009.125 Normalising this collision rate for train distance travelled, the WA accident rate is trending down, as seen in Figure 2.12. The Australian Government provided $14.07 million over 2008/09 and 2009/10 to fund

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the installation of boom gates and other safety measures at 62 high risk rail level crossing sites across WA and this work was completed in mid-2010.126 Main Roads WA is responsible for all railway crossings on State and local roads in WA.127 Figure 2.12: Normalised road vehicle collisions at level crossings per million train kms travelled, 1 January 2001 to 30 June 2009128

WA road and rail agencies have formed the Level Crossing Strategy Council to coordinate improvements in level crossings. Prioritised level crossing work is done via the Australian Level Crossing Assessment Model.129 To improve level crossing safety across the nation, the Australian Transport Council (ATC) released its National Railway Level Crossing Safety Strategy 2010–2020. It was developed by the Rail Level Crossing Group, and WA chairs this group.130

2.3.8 Rail safety and security Rail safety in WA is governed by the Rail Safety Act 2010, which replaced the Rail Safety Act 1998. The object of the new Act is to improve rail safety by providing for the safer operation of railways and ensuring greater efficiencies in the rail industry through regulatory harmonisation across jurisdictions. The 2010 Act, like the 1998 Act, is based on a co-regulatory approach where rail organisations are primarily responsible for managing risk.131 The PTA in its passenger survey identifies passenger safety perceptions. The survey of Transperth passengers found that daytime safety perception remains consistently high, while night time safety perception is only about two thirds of the level of daytime safety, as seen in Figure 2.13. To improve security and security perception problems, the PTA has increased the amount of CCTV coverage on train and bus stations to more than 1,300 installed cameras on all trains. It has also increased the number of transit officers and other security-related positions to 400, installed emergency call buttons linked back to the central monitoring room on all trains and platforms, and installed long-range PA systems on train stations, enabling central monitoring room officers to speak to people displaying anti-social behaviour. Given the importance of station car parks in attracting rail patrons, considerable effort has been given to improving their security. The ‘pay'n'display’ car parks are fenced and patrolled by car park attendants between 7am and 9pm weekdays while the ‘lock'n'ride’ car parks are fenced car parks that are locked between 9am and 3.30pm.

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Figure 2.13: Customer perception of safety on Transperth trains132

2.3.9 Environmental sustainability Shifting road freight to rail, and car trips to rail trips, will significantly reduce greenhouse emissions, as well as reducing congestion, noise and air pollution. At a strategic level, a key objective of the PTA’s Sustainability Action Plan is through investing in public transport, and integrating transport and land-use planning. The aim is to link employment, services and homes, aiming to minimise the need for trips and increasing the efficiency of people and goods movements. At a tactical level, a priority is on reducing water and energy consumption. To encourage a reduction in greenhouse gas generation by its passengers, a passengers’ greenhouse gas savings calculator is available on the Transperth website.133 However, increased rail services do have an environmental impact, notably noise, vibration and air pollution. Increased rail services have caused complaints on several rail lines.

2.4 Future challenges The future challenges to achieving improvements in rail infrastructure are: Addressing inadequate mass transit services to Perth’s north-east. There are currently no

mass transit services to Perth’s north-east with the exception of buses. Given that this area is one of the six major developing corridors, a mass transit service will becoming increasingly important. Such a service would benefit about 250,000 people. However, as there is no rail reservation in this area, building a rail line will require significant land resumptions or tunnelling, both of which would be expensive and have political impacts. While a light rail or improved bus services would assist in servicing this area, they cannot provide the speed and mass movements required for the growing population.

Increasing the capacity of passenger rail services servicing Perth’s south and south-east. The significant increase in population forecast in Directions 2031 and Beyond will require major increases in rail capacity. Extending lines and duplicating existing ones are likely to be required.

Determining the future of grain lines. A number of grain lines are not viable given their quality and the comparative cost advantage of road transport. However, their closure will have significant community impact, principally due to increasing the volume of road transport and the cost of road damage and road infrastructure upgrades. For example, as country towns do not have road bypasses, through town traffic will increase. Traffic through south-eastern metropolitan Perth will also increase markedly if road grain freight into Kwinana increases. Thus, while the closure of rail lines will save the need for resleepering, it will increase road-related costs. Therefore, determining the future of the grain lines requires an assessment of both the direct and indirect (externalities) costs. If Tier 3 railways are put into ‘care and maintenance’, it is probably unlikely that they will re-open, due to the high cost of restoration.

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Provision of intermodal terminals. Multi-use intermodal terminals are essential to increasing rail volumes, and driving down transport costs. It is generally private sector operators that provide the intermodal terminals, but the WA Government has a major role in facilitating this. To maximise the benefits from these terminals, all stakeholders (e.g. local government, local businesses, community and transport operators) should be involved in their planning and funding in proportion to the benefit that they receive from them. A major intermodal terminal is planned at Latitude 32 near Kwinana and its development timetable should be matched to the expansion of the port capability at Cockburn Sound.

Increasing rail freight. Increasing rail freight will be essential in accommodating the greater freight task with minimal impact on roads and communities through which the freight passes. Impediments to implementing this include rail connections with ports, inadequate intermodal facilities, closure of rail lines and the comparative advantage of road in many cases.

Facilitating the development of new rail lines and access to existing ones for resource operations. To date, third party access to the Pilbara rail lines has not occurred and is unlikely to in the near future. However, this should not deter the support for access where viable. In addition, encouragement should be provided by government for the construction of new rail lines with a preference for open access lines to allow smaller miners to exploit their resource.

2.5 Report Card rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Rail C+ C+ C- D-

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s rail infrastructure has been rated C+. This rating recognises that the metropolitan network has continued to improve but problems exist, including overcrowding at peak times and insufficient railway car parking. The regional rail network has contracted in the South West Land Division, parts of the grain network require substantial maintenance to maintain their load capacity and on-going viability, and there is a lack of long-term certainty over parts of the network. Problems exist with the interstate network and the connection to ports and intermodal facilities, meaning that road transport is increasing its competitiveness over rail. The Pilbara lines continue to be of a high efficiency, reflecting both their recent construction and high design standards, as well as operating as part of a vertically integrated supply chain. Positives that have contributed to the rating are: Significant improvement in metropolitan rail availability and capacity Incremental improvements in regional passenger services The high quality Pilbara rail lines A policy commitment that public transport is central to future urban development, and emphasis

on transport-oriented development Improving the quality of the interstate connection Planning for an integrated road and rail network at Oakajee port for the export of minerals.

Negatives that have contributed to the rating are: Declining condition of the grain network and its uncertain future Failure to develop a true third party access for the Pilbara railways Peak hour crowding on the Joondalup and Mandurah lines The inadequacy of rail reserves through Perth’s urban and industrial areas to accommodate

additional rail capacity

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Need for planning for intermodal facilities at Kalgoorlie and Esperance Limitations of intermodal facilities along the interstate line Inadequate rail connections to southern WA ports.

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3 Ports

3.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Ports B- B- C+ B

This rating recognises that there has been a substantial expansion of major WA ports in response to growing demand from the resources sector and industry more broadly. At some ports, this expansion is causing a conflict between port-related activities and surrounding commercial and urban land users, resulting in land-side connections becoming stressed. The growth of the economy will require further expansion and there is a need for long-term port planning and investment. Since the last Report Card, the major port sector developments include: Significant expansions at the Pilbara ports Planning for new ports including deep water ports at Oakajee and Anketell A lead poisoning incident at the Port of Esperance and increased community concern about

environmental and health issues at ports. Recently completed and in-progress major infrastructure projects include: The 2010 strengthening of the North Quay container berths at Fremantle Inner Harbour Ongoing deepening of the Fremantle Inner Harbour and deepwater channel The 2006 completion of the Fremantle North Quay rail loop and terminal Ongoing $3.5 million restoration of the general purpose berths at the Port of Albany Development of the Fortescue Metals Group iron ore export facilities at Anderson Point at the

Port of Port Hedland Development of Utah Point at the Port of Port Hedland.

Challenges to improving port infrastructure include: Meeting future container growth Provision of efficient transport corridors to ports Meeting bulk mineral export demand Guiding and regulating private sector port developments Integrating land-use decisions with port development.

3.2 Infrastructure overview This section focuses on the major commercial seaports and the major regional seaports, as they are an integral part of the State and national transport system. It does not cover local ports, defence ports or stevedoring services whose primary role is to load and unload ships.

3.2.1 System description WA’s port infrastructure, as seen in Figure 3.1, consists of: One major Government-owned container seaport – Port of Fremantle Seven Government-owned regional seaports – the ports of Albany, Broome, Bunbury,

Dampier, Esperance, Geraldton, and Port Hedland

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Twelve privately owned regional seaports – the ports of Useless Loop, Port Walcott, Cape Cuvier, Derby, Wyndham, Onslow, Cockatoo Island, Koolan Island, Barrow Island, Varanus Island, Thevenard Island and Airlie Island.

The function of the commercial seaports is to promote and facilitate trade. This role is fulfilled through the leasing of common-user infrastructure to private sector stevedores and specific sites to private berth owners for the import and export of commodities. WA handles more than half of Australia’s total trade tonnage.134 Of the WA commercial ports, the Port of Fremantle is the largest container port, while the regional ports specialise in the export of commodities such as iron ore and grain. Figure 3.1: WA ports135

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Table 3.1 identifies the import, export and cruise vessel data for each of the eight WA Port Authorities that are owned by the WA Government and operated under the Port Authorities Act 1999. Table 3.1: State-owned Port Authorities import, export and cruise vessel visits data for 2008/2009136

Port Import (‘000 mass tonnes)

Export (‘000 mass tonnes)

Total Throughput (‘000 mass tonnes)

Cruise vessel visits

Albany Port Authority 144 4,024 4,168 13

Broome Port Authority 200 191 391 19

Bunbury Port Authority 1,538 11,739 13,277 11

Dampier Port Authority 702 140,122 140,824 0

Esperance Port Authority 497 9,452 9,949 3

Fremantle Port Authority 12,545 14,058 26,603 29

Geraldton Port Authority 295 7,364 7,659 4

Port Hedland Port Authority 1,009 158,382 159,391 0

WA Total 16,930 345,332 362,262 79

The State-owned Port Authorities are required to annually negotiate and agree to a Statement of Corporate Intent and a strategic development plan with the Transport Minister. The Statement of Corporate Intent specifies for a single financial year the port authority’s performance objectives. The strategic development plans are confidential business planning documents that cover a five-year period. At the time of writing, the only port to have released its Statement for the current period was Albany. Port of Fremantle The Port of Fremantle is located on two sites in the greater Perth area - the Inner Harbour at the mouth of the Swan River and the Outer Harbour located 20km south at Kwinana. The Inner Harbour handles almost all of WA’s container trade while Kwinana is a major bulk port. The Inner Harbour of the Port of Fremantle provides facilities for container trade, break bulk vessels, livestock exports and the import of motor vehicles. The Inner Harbour also facilitates cruise ship and naval vessel visits. The Inner Harbour comprises three main areas – Victoria Quay, North Quay and Rous Head – as seen in Figure 3.2. Victoria Quay, located on the Fremantle side of the Swan River, is used for general cargo including motor vehicle imports and livestock exports. The Fremantle Passenger Terminal, which hosts cruise shipping and naval visits, is also located at Victoria Quay. North Quay is home to the Port’s two container terminals and a number of general cargo berths used for break bulk and liquid bulk cargos. The container facilities are operated by P&O (DP World) and Patricks under long-term leases from the Fremantle Port Authority, trading as Fremantle Ports. Together, the container terminals equate to 1,100m of heavy duty berths at a depth of 13m. The North Quay container berths have recently undergone a strengthening to enable larger ships to use the facility. The Rous Head area of the Inner Harbour is a large industrial estate used for port-related activities.

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Figure 3.2: Port of Fremantle Inner Harbour137

The Outer Harbour of the Port of Fremantle at Kwinana is a major bulk cargo port. The facilities at the Outer Harbour as mapped in Figure 3.3 include: Alumina Refinery Jetty - a private facility operated by Alcoa World Alumina Australia Ltd. This

244m jetty is equipped with a belt conveyor designed for the loading of refined bulk alumina. Ships also unload bulk caustic soda at this facility.138

Kwinana Bulk Terminal - 500m jetty owned and operated by Fremantle Ports used for various bulk commodities.

Oil Refinery Jetty - a private facility operated by BP facilitates the loading and unloading of bulk petroleum products.139

Kwinana Bulk Jetty - two berths owned and operated by Fremantle Ports with a combined length of 480m, accommodates ships unloading bulk products such as fertiliser and sulphur. This facility has been recently enhanced with the construction of the BMH Siwertell Continuous Ship Unloader at a cost of $11 million.

Australian Marine Complex - heavy lift facilities, floating dock and RORO wharf. Kwinana Grain Jetty - a 291m berth operated by Co-operative Bulk Handling Ltd, which

accommodates ships loading bulk grain. Figure 3.3: Port of Fremantle Outer Harbour140

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Fremantle Ports is currently undergoing a deepening of the Inner Harbour and Entrance Channel to 14.7m and Deepwater Channel to 16.5m. This will take the draught capability from the current 12.8m to 14m, enabling larger ships to enter and use the port. The dredged material will be used to create additional land at Rous Head for port-related activities. The total cost of the project is $250 million and is expected to be completed by the end of 2010.141 In 2006 the North Quay Rail terminal and rail loop was completed to increase the modal share of rail for the movement of containers from the port.142 The future of the port is likely to be strongly influenced by the recently-completed Fremantle Ports Optimum Planning Group's report. The Group was established by the WA Government to make recommendations on port and associated planning to meet needs over the next 50 years, and examined issues such as the relocation of container and other trades from Fremantle, road and rail transport links to Fremantle Ports' Kwinana Quay and James Point, and investigating costings and land requirements in the Outer Harbour. The completed report was handed to the WA Government in late 2009, but it has not been released at the time of writing. Port of Albany The Port of Albany is located adjacent to the city of Albany, 400km south-east of Perth on the WA south coast. The port is an export-oriented port with the export of grain and woodchips making up 53% and 39% of throughput respectively over 2008/09. The port has four berths – two general purpose berths, one berth dedicated to the export of woodchips, and a fourth berth used for the export of grain and container imports. The port is connected by both road and rail infrastructure, with about half of the exports arriving at the port by rail. The Port of Albany is currently undergoing a $3.5 million project to restore the general purpose berths to extend their lifespan until 2035. It is expected that the project will be completed by 2015. The Albany Port Authority is investigating deepening the port from 11.5m to 16-18m to allow for larger ships and possible trade diversification into the export of iron ore.143 Port of Broome The Port of Broome services the northern city of Broome and the Kimberley region. The port consists of a steel piled wharf structure that connects to three common-user berths, a 331m outer berth and two inner berths of 170m and 96m. With 391,000 tonnes of throughput over 2008/09, the Port of Broome is the smallest Government-owned port authority in WA. The main cargo traded at the port is fuel and oil imports, which account for 40% of throughput.144 Port of Bunbury The Port of Bunbury is located adjacent to the town of Bunbury approximately 180km south of Perth. It is the major port for WA’s south-west region. The port’s main export is alumina, which constituted 71% of the port’s 13.3 million tonne throughput in 2008/09. The port is wholly owned by the WA Government and operated by the Bunbury Port Authority under the Port Authorities Act 1999. The infrastructure at the Port of Bunbury is divided between two areas – the Inner and Outer Harbours. The Outer Harbour at Bunbury consists of: Number 1 Berth: 184m berth used for mineral sands Number 2 Berth: 184m berth used for methanol and general purposes.

The Inner Harbour at Bunbury consists of: Number 3 Berth: 381m berth used for woodchip exports Number 4 Berth: 130m berth owned and operated by ALCOA World Alumina and used for the

export of alumina and capable of handling Panamax sized vessels Number 5 Berth: 240m general purpose common-user berth Number 6 Berth: 131m alumina export berth owned and operated by Worsley Alumina Pty Ltd Number 8 Berth: 250m berth used for mineral sands and general bulk cargo.

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The Bunbury Port Authority is investigating the development of a second common-user bulk loading facility for the Inner Harbour, to accommodate the trade of bulk coal and bauxite.145 Port of Dampier Dampier is located in the Pilbara region of WA approximately 1,550km north of Perth and 16km from Karratha. The Port of Dampier is the second largest port in WA in terms of throughput with a record 141 million tonnes passing through the port in 2008/09. Iron ore exports represented 83% of this throughput with LNG being 10% and salt 3%.146 The infrastructure at the Port of Dampier is split among the various industries that trade through the port. Iron ore export infrastructure is operated by Rio Tinto and includes: East Intercourse Island: 341.4m jetty that can accommodate vessels in excess of 250,000

DWT in addition to a lay-by berth Parker Point Berth 1: 268.9m jetty Parker Point Berths 2 and 4: total length of 445m Parker Point Berths 3 and 5: total length of 350m 69.5m service wharf: used for the import of petroleum products.

Salt export facilities at the Port of Dampier are loaded at the 358.2m wharf at Mistaken Island, which is operated, by Dampier Salt Ltd. LNG, LPG and Condensate loading takes place at the Withnell Bay Terminal, operated by Woodside Energy Ltd. The Dampier Port Authority operates two cargo wharves and a 215m bulk liquefied berth.147 The Sino Iron Project is currently building a large-scale magnetite iron ore project at Cape Preston, 100km south-west of Karratha. The project involves constructing port infrastructure, including a port stockyard and barge loading facility.148 Port of Esperance The Port of Esperance is located on the WA south coast roughly half way between Albany and the South Australian border. The port’s main export is iron ore, which constituted 74% of the ports total throughput of 9.95 million tonnes in 2008/09. The port’s infrastructure consists of two land berths with a combined berth face of 457m and a third berth located on the main breakwater. The first land berth specialises in the export of grain. The second berth is used for the import of fuel and the export of nickel. The breakwater berth specialises in the export of iron ore and includes a travelling ship loader.149 In 2009, the Port commenced a $110 million capital works program to develop a world class handling and storage facility. An impetus to this was the conviction of Esperance Ports Sea and Land in the Esperance Magistrates Court in 2009 relating to lead carbonate exports and nickel concentrate odour in December 2006 and March 2007. Improvements made to address the odour problem included installing an air management system in the concentrate storage facility and enclosing the nickel concentrate loading circuit.150 Port of Geraldton The Port of Geraldton is adjacent to the city of Geraldton located 424km north of Perth in WA’s mid-west region. Exports represented 96% of 7.7 million tonnes of total trade during the 2008/09 period. Iron ore exports represent over half the total throughput of the port with grain, concentrates and mineral sand exports also being facilitated at the port. The port has six berths, including a 50m berth for small vessels and five larger berths, each with a particular specialisation. There is a dedicated grain berth, a minerals berth, an iron ore berth, a multi-purpose berth and a general cargo and livestock berth.151

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Port of Port Hedland The Port of Port Hedland is located in the Pilbara region of WA and services the mineral rich Pilbara region. It is the largest bulk export port in the world and the largest tonnage port in Australia. Over 2008/09, the port achieved a record throughput of 159.4 million tonnes of which iron ore exports constituted 96%. The Port’s infrastructure is split across three separate areas – the Inner Harbour, Anderson Point and Utah Point. The Inner Harbour consists of: Berth 1: 213m berth owned and operated by Port Hedland Port Authority, used for bulk

products such as manganese, copper concentrate, and general livestock Berth 2: 131m berth owned and operated by Port Hedland Port Authority, used for general

cargo Berth 3: 183m berth owned and operated by Port Hedland Port Authority, used for bulk salt

exports as well as livestock and petroleum products; the shiploader on this berth is owned and operated by Rio Tinto Minerals Dampier Salt

Two 329m berths at Nelson Point owned and operated by BHP Billiton Iron Ore used for the export of iron ore equipped with a 10,000 tonnes per hour fully retractable shiploader that can service either berth

Two 360m berths at Finucane Island owned and operated by BHP Billiton Iron Ore used for the export of iron ore.

The infrastructure at Anderson Point consists of iron ore stockyards and berthing facilities owned and operated by The Pilbara Infrastructure Pty Ltd, a subsidiary of Fortescue Metals Group. The combined length of the two berths is 760m. The planned capacity of the Anderson Point facility is 120 million tonnes per year. Utah Point is the site for a potential development to ease congestion at Berths 1, 2 and 3 and accommodate anticipated growth in trade volumes. The Authority is currently developing a small berth at Utah Point to service the smaller iron ore mining companies. Dredging of this berth was completed in 2007. The facility is expected to be completed by the end of 2010.152 Non-government-owned ports In addition to the eight Government-owned port authorities, several private companies own and operate ports in WA used to export various resources. These ports provided 16% by volume and 11% by value of WA’s international seaborne trade in 2008/09.153 Table 3.2 outlines the non-government-owned ports in WA that are declared under the Shipping and Pilotage Act 1967. Table 3.2: Non-port authority ports in WA154

Port Associated Facility Operator Commodity

Yampi Sound Cockatoo Island Cliffs Natural Resources Iron Ore

Koolan Island Cliffs Natural Resources Iron Ore

Wyndham Cambridge Gulf Ltd General Cargo

Derby Shire of Derby-West Kimberley

Currently inactive for exports

Port Walcott Cape Lambert Robe River Mining Co Pty Ltd (Rio Tinto Ltd)

Iron Ore

Varanus Island Apache Energy Ltd Crude Oil

Barrow Island Chevron Australia Pty Ltd Crude Oil

Onslow Airlie Island Apache Energy Ltd Currently inactive for exports

Thevenard Island Chevron Australia Pty Ltd Crude Oil

Onslow Onslow Salt Pty Ltd Salt

Carnarvon Cape Cuvier Dampier Salt Ltd (Rio Tinto Ltd)

Salt

Useless Loop Shark Bay Salt Pty Ltd Salt

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The Wyndham Port is currently undergoing a $10 million expansion and enhancement so that it can meet the needs of the expanding Ord River Irrigation System and other port customers. The project, which includes upgrading of the ship fendering system to the berth face of the jetty, extension of the container hardstand area and upgrades to port buildings, is expected to be completed by late 2011.155

3.2.2 Policy and governance The WA Government plays two key roles in the WA ports sector. Primarily, as the shareholder of the eight port corporations, the Government is responsible for ensuring that the ports are managed efficiently and effectively in the best interests of the people of WA. The Government also oversees the broader strategic planning of how ports and port developments fit within the State’s transport supply chains and connecting infrastructure. The WA Government does not have a specific strategic plan for ports. Port operations and development are regulated in two main areas. They are: Market competition in stevedoring and freight-forwarding operations. The Australian

Competition and Consumer Commission (ACCC) reviews stevedoring and freight-forwarding operations to ensure that the market remains competitive.

Development of ports. Proposals for the expansion of port facilities are subject to environmental assessment processes.

Under the Port Authorities Act 1999, the Port Authorities in WA have the power to levy fees for licences and approvals and impose port charges as they determine necessary. The Port Authorities are also required to achieve a return on assets of between 5% and 8%.156 Prices for port corporation services are not subject to regulatory oversight in WA, as is the case in Victoria, Queensland and South Australia. A 2007 review into port competition and regulation in WA found that expanding the current levels of economic regulation of port corporation prices is not likely to deliver improved competition outcomes.157 If an increase in regulatory oversight was initiated, it would most likely be done through the WA Economic Regulation Authority.

3.2.3 Sector trends Container throughput growth The Port of Fremantle is the only WA port that handles large volumes of containers. The volume of freight to pass through Fremantle each year is forecast to more than double by 2025.158 Figure 3.4 illustrates the growth in container traffic over the last five years. Figure 3.4: Container traffic at the Port of Fremantle159

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Container volumes have grown by approximately 9.5% per annum over the past 15 years. This growth is forecast to continue with 0.89 million TEU expected to pass through Fremantle in the 2016/17 financial year and 1.3 million TEU in 2024/25. Figure 3.5 illustrates the forecast growth in container trade at the Port of Fremantle.160 Figure 3.5: Forecast container trade at the Port of Fremantle161

The Inner Harbour of the Port of Fremantle is expected to reach capacity by 2017. There will be a need for additional container berths outside of the Inner Harbour. There is a proposal to develop container and general cargo port facilities at Kwinana near the Outer Harbour area of Fremantle Port. Several options were considered for the development with the ‘northern option’ now going through the statutory approvals process. The northern option is an island design about 1km offshore with road and rail links via an open spanned bridge. The proposed development would have an annual capacity of 1.7 million containers.162 A private port, James Point Pty Ltd is also proposing to develop a capacity to handle up to 1.7 million TEU. Growth in iron ore exports The growth in iron ore exports in WA, particularly in the Pilbara region has led to an increased demand for the region’s port infrastructure. Over 2008/09, the Pilbara exported more than 326 million tonnes of bulk commodities. This is forecast to reach 530 million tonnes by 2015 and 750 million tonnes by 2020.163 Despite the large capacity of the ports of Port Hedland and Dampier, there will be a requirement for further investment in new port sites to meet the increased demand. In March 2010, the WA Government announced that it would spend $3.5 million over three years to develop a plan and an agreement for a new multi-user deepwater iron ore port at Anketell, 30km east of Karratha. The port will be built by a private proponent under an agreement with the WA Government and managed by the Dampier Port Authority. The port will have a capacity of over 350 million tonnes, with operations expected to commence by 2015.164 To meet the demand in the mid-west region, the WA Government signed a State Development Agreement in March 2009 with Oakajee Port and Rail, a joint venture of Mitsubishi Development Pty Ltd and Murchison Metals Ltd, for the proposed Oakajee deepwater port. This was followed by a $339 million commitment from the Australian Government to the project through the Nation Building for the Future program. The port will be located 20km north of Geraldton and will be used as a common-user facility. The port will be capable of loading cape-sized vessels, unlike the nearby Port of Geraldton, which can only handle Handymax-sized vessels, and is expected to handle up to 35 million tonnes of iron ore per annum.165 The project is anticipated to begin in early 2011 with operations expected to commence in 2014.166

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WA Port Authorities investment program Figure 3.6 shows the investment program for WA Port Authorities.167 New works between 2011 and 2014 at Fremantle Ports are: North Quay Rail Terminal, Stage 2 ($19 million) Kwinana Bulk Jetty consisting of bulk handling equipment ($33 million), export-import

infrastructure ($75 million), and truck loading facilities and storage ($14 million) Transport Interchange Facilities ($10 million) Replace pilot vessels and emergency response vessel ($19 million) Motor vehicle decking Victoria Quay ($8 million).

Work at other ports consists of: Wastewater Treatment Plant, Geraldton, ($2 million) Oakagee Port and Rail – Design and scoping works ($11 million) Dredging works, Port Hedland ($30 million) Pilot Boats, Albany and Esperance ($2.8 million).168

Figure 3.6: WA Port Authorities investment169

3.3 Performance

3.3.1 Port infrastructure Performance measures of port service quality are not comparable across ports due to differences in location, port infrastructure and the types of cargo handled. In addition, most port measures, such as average ship turnaround time, are likely to be influenced by the efficiency of stevedores rather than port infrastructure. Unlike Victoria, Queensland and South Australia, prices for port corporation services in WA are currently not subject to independent economic regulatory oversight, making it difficult to obtain the necessary cost data upon which to assess price and quality of port services. However, in terms of infrastructure, the following comments can be made. Port expansions normally only occur where there is clear business case to do so. It should be noted that the government-owned ports are not required to maximise profits, but are required to earn a minimum rate or a return on the asset value. The problem with investing in infrastructure when there is a business case is that it is based on a just-in-time philosophy where infrastructure will be provided when there is a need for it. Unfortunately, demand for resources can increase very quickly and new port infrastructure cannot be built at the same speed, meaning that there will be insufficient capacity. Conversely, the demand may drop suddenly and this can leave the infrastructure underutilised.

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Container parks at the Port of Fremantle are experiencing significant congestion resulting in delays to trucking that cause flow on impacts for parties involved in the container supply chain. Causes of this include high container stock levels in parks, limited operating hours of parks, poor information flow between parks and carriers and the lack of container parks outside of the port (e.g. 90% of Fremantle’s park capacity is on-port compared to 24% in Melbourne and 45% in Sydney).170 The expansion of port infrastructure across WA to service growing demand is causing community problems due to the land-side impacts of port operations. The majority of WA’s major ports are located in the middle of, or close to, cities and towns. As road and rail volumes to the ports increase, so too does the noise, dust and traffic congestion for the surrounding communities. The main ports that have incurred community complaints are Esperance, Fremantle and Port Hedland. The issue is not new, as the communities in Esperance, Albany and Geraldton have experienced large freight movements through their towns during the wheat harvest period for decades. With the planned increase in the export of iron ore, lead, nickel and woodchips, ensuring minimal impact from the movement of freight to the port will become even more important. Developing new ports will help to reduce the growth pressure on existing ports. The proximity of residential areas to many WA ports imposes constraints on what occurs at the port or how port operations occur. For example, the health concern about iron ore stockpiles at Port Hedland may require infrastructure be built to deal with the effects of iron ore dust, or require the operational procedures to be changed. The impact of the lead poisoning incident at the Port of Esperance resulted in the development of closed ship loading systems and the transfer of the export of lead to Fremantle. The capacity of the Fremantle Inner harbour to handle containers is limited by the road and rail access to the port through adjoining residential and commercial areas. While the Pilbara ports have not suffered the serious bottlenecks experienced by east coast ports, capacity constraints are starting to appear as export growth resumes following the global financial crisis. While the export capacity for larger mining companies will be provided for by the companies themselves, multi-user port facility provision is less certain for the growing number of smaller miners all seeking port capacity. At Port Hedland, the new Utah Point facility will provide capacity for some emerging Pilbara miners. The planned expansion of the inner harbour of Port Hedland over the next five years would allow further access because export capacity will double what was able to be exported in 2009.

3.3.2 Port security All the Government-owned ports in WA are Security Regulated Ports. All have security plans that aim to safeguard maritime transport and facilities against unlawful interference. The security regulatory environment is governed by the Commonwealth Maritime Transport and Offshore Facilities Security Act 2003 and Offshore Facilities Security Regulation 2003, which reflect the International Ship and Port Facility and Security (ISPS) Code. Over the last few years, each port has increased security measures such as participating in information-sharing forums between government agencies and regulated port users, building new and upgraded fencing and gates, restricting access to sensitive areas, undertaking background checking of port workers through the introduction of the Maritime Security Identification Card (MSIC), and increasing the volume of closed circuit television (CCTV) surveillance.

3.3.3 Environmental sustainability The WA port authorities all aim to achieve environmental sustainability. They attempt to minimise the impacts of their operations on surrounding land and water environments and achieve ecologically sustainable port developments through a combination of strategies. Environmental factors that are key to green ports are resource consumption (e.g. water, energy, transportation)

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and environmental quality (e.g. emissions, water quality, land use). The importance of environmental issues is reflected in the fact that it is a key requirement for the approval and successful financial and political completion of the project. Future port developments will continue to meet increasingly strict environmental guidelines.

3.4 Future challenges The challenges in achieving improvements in port infrastructure are: Meeting future container growth. Container freight volumes are expected to grow for the

foreseeable future. Over the short to medium term, this growth can be accommodated by developments underway at the Port of Fremantle, which will provide additional stevedoring capacity and infrastructure upgrades, but will require new berths to be constructed outside of the Inner Harbour. Growth in container freight cannot be accommodated solely at the Inner Harbour due to capacity restraints and development restrictions. A future challenge will be the need to integrate any new container facilities at the Outer Harbour of Fremantle into intermodal hubs/supply chains where consolidation and dispatch of containers occur, rather than at the ports. Instead, container ports will focus on the rapid loading and unloading of containers, and optimising transfers.

Provision of efficient transport corridors to ports. As port throughput volume increases, so does the traffic to and from them. This movement can cause community concern as well as cause increased costs for those involved in the supply chain as congestion increases.

Meeting bulk mineral export demand. Maintaining the level of growth seen in mineral exports in WA over recent years will require significant investment in port infrastructure. The timely funding, development and construction at existing ports and the development of the Oakajee and Anketell ports is expected to be needed to meet demand.

Guiding and regulating private sector port developments. The majority of both current and future WA port developments will be driven by the private sector, particularly in the areas of iron ore and LNG. In the WA context, guiding and regulating the shape of private development and optimising the role of existing port authorities in working with the private sector will be a major challenge.

Integrating land-use decisions with port development. Ports require large amounts of land and generate significant road and rail traffic. Ensuring compatible land use around ports is challenging due to the typically high value of land around ports. The need to consider future port requirements when making nearby urban development decisions is recognised by the WA Government. However, ensuring that this occurs is challenging and requires that: Local governments consider the port’s future requirements Ports better contribute to local and regional planning Urban encroachment and other developments do not prevent the efficient functioning of the

port.

3.5 Report Card rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Ports B- B- C+ B

Based on considerations of planning, funding, and infrastructure capacity and condition, WA port infrastructure has been rated B-. This rating recognises that there has been a substantial expansion of major WA ports in response to growing demand from the resources sector and industry more broadly. At some ports, this expansion is causing a conflict between port-related activities and surrounding commercial and urban land users, resulting in land-side connections become stressed. The growth of the economy will require further expansion and there is a need for long-term port planning and investment

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Positives that have contributed to the rating are: Significant investment at ports including Cape Lambert and Port Hedland Investment at ports generally timed to meet demand Planning for the Oakajee port Deepening of the Fremantle Harbour.

Negatives that have contributed to the rating are: Congestion on port land at some ports Inadequate freight corridors to many ports preventing expansion and causing community

problems Over-reliance on roads for port access in the southern ports Residential development close to some ports preventing port expansion or limiting certain

operations.

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4 Airports

4.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Airports C+ Not rated B B

This rating recognises that there has been significant investment in the Perth Airport although this has lagged behind the dramatic growth in demand. There is ongoing concern about the commitment to, and the timing and logistics of, the International Terminal consolidation (Terminal WA) and the major road improvements around the airport (Gateway WA project). There has been an appropriate level of development at regional airports to meet changing demand, and incremental and sustained improvement in remote airport infrastructure due to the Regional Airport Developments Scheme. Since 2005, the major airport developments have been: The release of updated Master Plans for all Australian Government-leased airports The growth in non-aeronautical developments on Australian Government-leased airports.

Recently completed and in-progress major infrastructure projects include: 2007 extensions to the Perth Airport taxiway system and general aviation apron 2008/9 extension to aprons and Terminals 2 and 3 at Perth Airport 2009 runway lengthening and widening at Karratha 2010 new link road between domestic and international terminals at Perth Airport.

Challenges to improving airport infrastructure include: Aligning on-airport development with local land-use plans Addressing road transport congestion at Perth Airport Meeting long-term passenger and freight growth Maintaining appropriate returns at regional airports.

4.2 Infrastructure overview

4.2.1 System description Airport infrastructure consists of fixed assets on airport land including runways, terminals, buildings (i.e. aeronautical and non-aeronautical industrial, commercial and retail buildings), roads, services, drainage systems and fencing. In WA, airports can be divided into the following categories: International and major domestic airport – Perth Airport Metropolitan general aviation airport – Jandakot Airport 16 major regional airports Minor rural and remote airstrips.

There are just over 100 regional airports in WA that are owned and operated by local government authorities or other entities, such as mining companies.171

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Table 4.1 identifies the passenger statistics for WA’s major airports in the last four years. Table 4.1: Passenger statistics for WA airports (Total Revenue Passengers)172

na: Either Not Available or Not Applicable

International freight at Perth Airport has risen from 1,378 tonnes in 2005/06 to 1,783 tonnes in 2008/09.174 Domestic freight data is held by cargo terminal operators and is not generally available. In WA, intrastate regular public transport (RPT) services are of two types: Deregulated air services. There are eight deregulated RPT routes in WA connecting Perth with

Broome, Kalgoorlie, Kambalda, Karratha, Kununurra, Paraburdoo, Port Hedland and Newman. Competition is permitted on these routes.

Regulated air services. These routes are ones where competition is not permitted, as the routes do not have sufficient passengers to support more than one airline. There are three types of regulated air service in WA: Networks where services to a number of airports are limited to one airline without any

Government subsidy. There are seven routes on the Coastal Network and six on the Northern Goldfields Network.

Protected routes where one airline provides a service to and from one airport without any Government subsidy. There is one protected route – Perth/Derby.

Subsidised air services where one airline provides a service that is subsidised by the Government. There are two subsidised air service routes.175

The WA Government is currently discussing a new Intrastate Aviation Framework with the likely changes being: The Geraldton route will become deregulated Services that are currently supplied through the Coastal Network, Northern Goldfields Network

and the Kimberley subsidised air service will be offered through an arrangement of seven route/network configurations

There will be limited competition on four protected routes between Perth and Albany, Esperance, Learmonth and Leinster.176

Figure 4.1 shows the location of regulated air services and the major airports.

Airport 2005/06 2006/07 2007/08 2008/09 2009/10173

Albany 49,824 51,186 57,401 52,805 na

Broome 302,061 344,790 360,652 391,914 401,359

Carnarvon 18,670 20,689 23,651 21,460 na

Derby-Curtin 1,610 6,445 20,847 24,274 na

Esperance 37,100 40,061 44,372 43,828 na

Geraldton 88,610 87,634 103,455 99,479 na

Kalgoorlie 192,891 211,857 255,957 234,269 na

Karratha 261,825 310,467 389,406 486,582 587,211

Kununurra 50,901 60,680 69,483 74,742 na

Learmonth 30,292 36,840 44,674 43,210 na

Leonora 4,649 9,127 15,147 18,335 na

Newman 100,516 114,889 135,987 176,559 na

Paraburdoo 87,798 101,428 114,157 130,298 na

Perth 7,005,254 7,977,091 8,952,069 9,359,248 9,991,591

Port Hedland 120,931 158,755 196,252 208,819 na

Ravensthorpe 18,194 58,877 57,627 39,087 na

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Figure 4.1: Location of Regulated Air Services and the major airports177

Perth Airport Perth Airport is owned by the Australian Government and operated by Westralia Airports Corporation. It was acquired in 1997 and operates under a 50-year lease from the Australian Government, with an option for a further 49 years. Perth Airport is the fourth largest airport in Australia for passengers and provides the main aviation hub for the western part of the continent. It is a key component of WA’s transport infrastructure and contributes to the State’s economy through

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tourism, airfreight and business development. Despite the global economic crisis and the pandemic (H1N1) 2009 influenza (swine flu), Perth Airport’s passenger figures are still strong, as seen in Table 4.2. Table 4.2: Perth Airport’s passenger figures178

2005/06 2006/07 2007/2008 2008/2009 2009/10179

International 2,027,000 2,221,000 2,513,000 2,619,000 2,980,885

Domestic 5,108,000 5,868,000 6,666,000 7,116,000 7,010,706

The infrastructure at Perth Airport consists of: A primary north-south 3,444m runway and a secondary 2,163m east-west runway The International Terminal building with nine operational aircraft bays, five of which have

aerobridges A multi-user Domestic Terminal complex with 22 aircraft bays of which, five have aerobridges Air freight, aviation fuel and in-flight catering facilities Air traffic control infrastructure 24-hour rescue and fire fighting capability.180

There are three main terminals at Perth Airport. Terminal 1 is the International Terminal and is located on the eastern side of the main runway. Terminals 2 and 3, the two domestic terminals, are located on the western side of the main runway. Terminal 2 is operated by Qantas and used solely for its operations and subsidiaries. Terminal 3 is operated as a shared-user terminal by the Westralia Airports Corporation and is used by the non-Qantas airlines for domestic services.181 The Airport’s 2009 Master Plan stated that total passenger movements are expected to increase from 9.2 in 2008 to 18.9 million by 2029. Domestic passenger growth has been forecast to grow from 6.7 million to 13.3 million over that period with international passenger growth expected to rise from 2.5 million to 5.6 million. Total projected passenger movements are shown graphically in Figure 4.2. Figure 4.2: Total projected passenger movements at Perth Airport from 2009 to 2029 (’000s)182

There have been a number of infrastructure projects completed and commenced since the 2005 Report Card. In 2007, a new freight apron was constructed and extensive extensions were completed on the taxiway system, general aviation apron, and car parking. In 2008, a remote parking apron was constructed for Qantas services and $50 million was spent on extensions to its Terminal 2; the shared-user Terminal 3 was also upgraded including the construction of aerobridges.183 In 2008/9, a further apron area with 36 aircraft parking positions was built. A redevelopment to improve vehicle and pedestrian access at the front of the domestic terminals was

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completed in 2010.184 Key developments are the proposed $120 million Terminal WA on the international side of the airport, which will affect plans for a phased transfer of most passenger operations across to the international side by 2017.185 Jandakot Airport Jandakot Airport, located in Perth’s south, is the only dedicated general aviation airport in the Perth metropolitan region. The airport provides facilities for tourism, pilot training, general aviation and emergency services. The airport is owned by the Australian Government and operated by Jandakot Airport Holdings Pty Ltd. It was acquired in 1998 and operates under a 50-year lease from the Australian Government, with an option for a further 49 years. Jandakot Airport has three runways dedicated to general aviation activity and an air traffic control tower.186 It has commenced a major commercial development program, Jandakot City, which will ultimately cover 150 hectares of airport land.187 Karratha Airport Karratha Airport is located 14km west of the town of Karratha in the Pilbara region of WA. It services the booming Pilbara region and is the second busiest airport and largest regional airport in WA. The airport is owned and operated by the Shire of Roebourne. Over 2008/09, the airport recorded 486,582 passenger movements. The airport is a hub for the resources industry, in particular for ‘fly in–fly out’ mining operations, including a significant helicopter presence to service the North West Shelf developments. The airport has a single sealed runway with a length of 2,280m and a system of six taxiways and numerous helicopter taxiways that connect the regular passenger transport (RPT) apron and general aviation apron. The RPT apron at Karratha is equipped to handle B737-sized aircraft and has four bays. The general aviation apron is used by both fixed and rotary wing aircraft, with extra apron areas at the airport set aside for the local fixed base helicopter operators. These apron areas connect to a single terminal building. Supporting infrastructure at the airport include car parks, aircraft fuelling infrastructure, hangars, maintenance areas and navigational visual support aids.188 Karratha Airport has experienced very strong growth of around 9% per annum for the past 10 years on the back of the Pilbara region resources boom. The runway was lengthened to its present 2,280m and widened to 45m in 2009 at a cost of $21 million.189 Current aviation demand is placing significant pressure on the functionality of the terminal building.190 Forecast growth in the number of aircraft movements and size of aircraft will require significant investment in infrastructure at Karratha Airport. The Airport’s 2009 Master Plan indentifies development works that will be required, including a terminal expansion and increases to the airside capability of the airport.191 Broome Airport Broome Airport is the third largest airport in WA in terms of total passenger movements. The airport is located in the town of Broome and is considered the aviation gateway to the Kimberley region of WA. The airport is owned by Pearl Coast Properties Pty Ltd and operated by Broome International Airport Pty Ltd. Over 2008/09, the airport recorded 391,914 passenger movements. Broome Airport has a single paved 2,548m runway capable of handling B767-sized aircraft, although the largest aircraft regularly using it is the B737-800. A taxiway system connects the runway to the aprons and hangars. The RPT aprons at Broome have nine parking positions, four of which are capable of taking B737 aircraft and one is capable of taking B767 aircraft. The RPT apron is currently at capacity during peak periods. There is also a general aviation apron and considerable general aviation parking at the airport. The terminal building at Broome consists of three inter-related facilities – a check-in terminal, a departure terminal and an international terminal.192

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Forecasts in the Broome Airport Master Plan indicate that by 2025, the airport will be handling 817,739 passengers with 10,804 RPT and 63,000 general aviation aircraft movements.193 Kalgoorlie-Boulder Airport The Kalgoorlie-Boulder Airport is located adjacent to the city of Kalgoorlie in the Goldfields-Esperance region of WA. The airport is owned and operated by the City of Kalgoorlie-Boulder. The airport comprises a main runway that is 2,000m long and a secondary 1,200m runway. These runways are serviced by a system of taxiways and aprons. The airport recorded 234,269 passenger movements over the 2008/09 calendar year making it the fourth biggest airport in WA in terms of passenger numbers.194

4.2.2 Policy and governance The WA Government recognises that airports have both direct and indirect benefits. They provide transport services to generate significant direct economic activity, employment and revenue, and they enhance quality of life. They also are becoming major centres of activities in their own right with clusters of retail and commercial developments on airport property and around them. They also facilitate indirect economic activity, as aviation is known as a key driver of investment, trade, tourism and international education. Of particular importance in WA is the role that airports play in rural and remote communities throughout this vast but sparsely populated State. To aid this, it is important to ensure that regional aviation infrastructure and airport services are developed and maintained. In 1994, the WA Government developed the Regional Airports Development Scheme (RADS) and it has had continual financial support since that time. In the 2010/11 WA Budget, the State Government has allocated $28 million over four years for the RADS. 195 Under the 2010/11 funding round, 36 regional airports in WA were allocated grants totalling $6.87 million for infrastructure upgrades and maintenance programs.196 All airports are governed by the Commonwealth Air Navigation Act 1920 and the Aviation Transport Security Act 2004. Airports leased from the Australian Government come under the Airports Act 1996. Airports owned by the Australian Government are subject to additional Government legislation provisions, and are not subject to other State legislation. On-airport planning is defined by an airport’s Master Plan. Master plans have been developed by the Australian Government-leased airport operators to cover the next twenty years, and are reviewed and updated at no more than five-yearly intervals. Master plans are required to be approved by the Minister for Infrastructure. Major development plans are required for certain types and scale of developments, such as runway extensions, terminal expansions and capital works over $10 million. While the use of master plans is the basis for planning considerations on airports, these stop at airport boundaries and have little, if any, influence off-airport.197 The regulations and planning policies that influence off-airport planning decisions vary depending on whether or not they are Australian Government-leased airports, defence airports or airports that come under the State planning regimes. All airports not owned by the Australian Government are subject to State legislation. The WA Government advises airport operators and local governments on the appropriate use of the WA planning provision overlays covering airport environments. In December 2009, the Australian Government released the National Aviation Policy White Paper. This will drive an improvement in integrated planning at Australian Government-leased airports by:

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Requiring each capital city airport to establish a Planning Coordination Forum, to act as the vehicle to lead the ongoing discussions between the airports and the three levels of government on issues including the Master Plans, the airport’s program for proposed on-airport developments, regional planning initiatives, off-airport development approvals and significant ground transport developments that could affect the airport and its connections.

Requiring airports to produce more detailed Master Plans that will have to contain: Additional detail on proposed use of land in the first five years of a Master Plan, including

information on planning for each non-aviation precinct, the number of jobs likely to be created, anticipated traffic flows, and the airport’s assessment of the potential impacts on the local and regional economy and community

The inclusion of a ground transport plan in the Master Plan The inclusion of a more detailed analysis of how the Master Plan aligns with State, Territory

and local government planning laws, as well as a justification for any inconsistencies. Requiring all airports to establish and lead Community Aviation Consultation Groups to ensure

that local communities have direct input on airport planning matters, with appropriate arrangements for engagement with other industry stakeholders such as airlines and Airservices Australia where necessary.

Prohibiting incompatible developments on Australian Government airport sites, such as residential developments and schools, unless exceptional circumstances exist.

Developing a number of initiatives to safeguard both airports and communities from inappropriate off-airport developments, which could threaten public safety and the future viability of aviation operations. These would include working with the jurisdictions on national land-use planning regimes near airports.198

These changes are largely incorporated in the Airports Amendment Bill 2010 currently before the Australian Parliament.

4.2.3 Sector trends Increasing passenger movements and air freight volumes The Bureau of Infrastructure, Transport, and Regional Economics predicts that passenger movements through all airports will increase by 4% per annum over the next 20 years, resulting in a doubling of passenger movements over the period. Each master plan provides forecasts of passenger demand for their airport. At Perth Airport, significant and unanticipated growth over the last five years due to the mining and resources boom has had a much greater impact on demand, with a doubling in intrastate air services. During the new peak period from 0500 hours to 0700 hours, apron and runway capacity is almost fully utilised.199 Due to this demand, the proposal to consolidate all large Regular Passenger Transport (RPT) air services into the current International Precinct, previously projected to occur after 2020, has been brought forward and the airport anticipates that it will occur in stages commencing in 2012.200 There is sufficient land at Perth Airport to accommodate extensions to the Airport’s runways and taxiways and to construct a new parallel north-south runway to facilitate future aviation demand. The airport considers it unlikely that any of the runway developments will be required before 2029.201 New apron works will be undertaken to accommodate future growth and will include areas to service the A380 aircraft and meet increased passenger volumes. Planned terminal developments include: A new terminal called Terminal WA to accommodate domestic services within regional WA.

This $120 million terminal will be near the current International Terminal. Terminal WA was expected to be ready for use by 2012, but construction has not yet started.

Investment in the existing domestic terminals to ensure continued growth in interstate air travel. A new link road between the domestic and international terminals is being constructed in 2010.

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Investment to increase capacity and customer service standards in the International Terminal.202

Conflicts between on-airport development and off-airport land-use planning The State Government and local government have no control over land-use planning decisions on Australian Government-leased airports. This has led to on-airport developments that do not mesh with local development and infrastructure plans. The problem arises because the Airports Act 1996, which applies to the airports, diminishes the ability of the States and local governments to ensure that airport development conforms with broader planning strategies. Specifically, the Act results in airport development plans being exempt from State planning legislation. It only requires airport owners to involve State and local governments in airport planning via seeking comments on draft master plans on a five-yearly cycle. This problem is well recognised and resulted in the undermining of the State’s land-use policy to concentrate development in activity centres, and freight and logistics precincts. An example of non-aviation development has been the commercial precincts established at the Perth Airport including Kewlink, Onkew, Hkew, and Transkew business precincts. These have significantly affected traffic flows on roads serving and surrounding the airport. Jandakot Airport has now started development of a 150-hectare commercial precinct on airport land, which could cause similar problems.203 The WA Government outlined in its submission to the National Aviation Policy Statement that there needs to be a focus on ensuring that non-aeronautical developments do not compromise aeronautical requirements and that they take surrounding infrastructure into consideration.204 Major airports becoming Airport Cities A global trend is for major airports to become major business areas that integrate air facilities with business, industrial and commercial developments. This builds on the historical concept that key transport nodes (such as coastal and river ports and railway towns) have become major commercial centres. In WA, this is already occurring at Perth Airport. Airports are no longer just a key piece of transport infrastructure; they are becoming destinations in their own right and are becoming Airport Cities. The challenges for airports in achieving this goal include: Simultaneously meeting both the growing demand for air passengers and freight, and the

demand for other non-aeronautical functions due to commercial and retail developments Ensuring that they have sufficient on-airport infrastructure to meet demand Ensuring that there is sufficient off-airport infrastructure to allow transport to and from airports

to operate efficiently Preventing or minimising inappropriate creep of residential developments towards the airport

boundary which could compromise the operations of the airport Minimising noise from air and road movements and other environmental complaints by those

living close to the airport.

4.3 Performance While infrastructure obviously affects operational performance of airports, it is difficult to measure its contribution directly. Consequently, the measures of on-time arrivals, quality of service, capacity and security are used to provide an indication of infrastructure quality. Six WA airports are monitored for punctuality and reliability by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), and these are listed in Table 4.3.d

d On-time performance is reported for all routes where the passenger load averages over 8,000 passengers per month, and where two or more airlines operate in competition. The following data reports by airport against flights operated on those routes only.

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Table 4.3: On-time arrivals and departures for May 2010205

Airport On-time Arrivals On-time Departures

Broome 82.1% 84.2%

Kalgoorlie 90.0% 86.1%

Karratha 88.5% 87.5%

Newman 89.1% 91.3%

Perth 86.8% 90.1%

Port Hedland 95.0% 88.8%

To put these figures into a national perspective, during this period the highest percentage of on-time departures was 93.2% at Alice Springs, while the lowest percentage of on-time arrivals was 76.4% at Wagga Wagga Airport. Perth Airport is the only WA airport required to report on its quality of service to the Australian Competition and Consumer Commission (ACCC).e Quality of service includes subjective measures such as surveys of airport users’ perceptions and objective measures such as check-in waiting times. As seen in the Figure 4.3 below, over the reporting period (2004/05 to 2008/09), Perth Airport’s overall rating improved slightly from 3.56 to 3.71. Figure 4.3: Perth Airport – overall quality of service ratings for international and domestic terminal services, and airside services206

Capacity Airport capacity is determined by infrastructure such as runways and aprons, terminals, baggage handling facilities and car parking. In the short term, there is sufficient capacity at WA's major airports to meet expected growth. In the longer-term, additional airport infrastructure will be needed, especially at Perth Airport. Investments in WA’s major airports have been significant over the last five years as demand for air travel and non-aeronautical developments on airports have increased substantially. All the State’s international and major domestic airports have expanded to some degree, and most airports are anticipating significant expansions. For many small airports, investment cannot be funded from existing patronage as the airports run at a loss. Consequently, they rely on local government subsidies or grants from the WA or Australian Governments. This reliance on external funding makes the sustainability of these airports less certain than profit making airports. Specific infrastructure issues are observed at: Perth Airport. The growth in air passenger and freight movements, and the development of the

Kewdale commercial and industrial precincts on airport land have led to an increased volume e The Australian Competition and Consumer Commission (ACCC) requires seven designated airports to report costs, revenues and profits relating to the supply of aeronautical and aeronautical-related services, and quality of service monitoring.

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of road traffic on the roads leading to the airport. This is leading to congestion and community concern. To address the problem, the WA Government submitted a $600 million WA Gateway proposal to Infrastructure Australia which consisted of: Building an interchange at the intersection of the Leach and Tonkin highways Widening the Tonkin Highway (Great Eastern Highway to Roe Highway) to a six-lane

freeway Building a grade-separated interchange at the intersection of the Tonkin Highway and Horrie

Miller Drive/Kewdale Road Upgrading the intersection between the Roe and Tonkin highways to a full freeway-to-

freeway interchange Building a flyover at the intersection of the Leach Highway and Abernethy Road Upgrading Orrong Road (from the Leach Highway to the Graham Farmer Freeway)

The protection of a rail corridor to the airport is essential to ensure that a rail service can be built at a future stage.

Broome Airport. The existing runway length is considered adequate for the anticipated growth in passengers. The taxiway system and the RPT apron will require upgrades to handle short-term growth. A new $20m air traffic control tower and fire station complex, to be operated by Air Services Australia, will be constructed in 2010. Longer-term growth will require expansion of the terminal.207

Kalgoorlie-Boulder Airport. Due to the near simultaneous arrival of certain flights, there is short-term congestion around the terminal pick-up and drop-off area. There is a lack of spaces in the general car park.208

Security Following the terrorist incidents on 11 September 2001, the Australian Government introduced additional security requirements, notably through the Aviation Transport Security Act 2004 and the Aviation Transport Security Regulations 2005, at Australian airports including: Increased Australian Federal Police presence at airports 100% checked bag screening for all international flights Screening of all domestic checked bags at major, and now at regional, airportsf Limiting liquids, aerosols and gels on international flights.g

While security requirements are determined by the Australian Government, airports have the ability to enhance their operational effectiveness via coordination with police, security operators and airlines. The additional security measures, notably the requirement of 100% checked bag screening at regional airports, contributed to the increase in airports’ costs at Broome, Derby-Curtin, Kalgoorlie, Karratha, Kununurra, Learmonth, Newman, Paraburdoo and Port Hedland. Costs incurred included conveyors, equipment to screen passengers and checked baggage, alterations or new buildings to house the screening system, and the installation of overt and covert closed-circuit television security cameras.209 Future security priorities of airports will be to: Extend security along the supply chain to address the security risk of freight Expand the counter-terrorism focus of security measures to address other forms of criminal

behaviour at airports. Environmental sustainability Australian Government-leased airports are required to prepare and maintain an Airport Environment Strategy (AES), which is reviewed and updated every five years. The main intent of

f Came into effect in 2006. g New legislation, notably Aviation Transport Security Act 2004 and the Aviation Transport Security Regulations 2005.

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an AES is to demonstrate to the Australian Government, key stakeholders and the surrounding community how an airport will manage environmental issues on the airport for that five-year cycle. The Act requires that an airport undertakes consultation with key stakeholders and the community prior to submission of the AES to the Government. Environmental issues on the leased airports are administered principally by Australian legislation, the Airports Act 1996, the Airport (Environment Protection) Regulations 1997 and the Airport (Building Control) Regulations 1997. The Airport Building Controller (ABC) and the Airport Environment Officer (AEO) are the on-site regulatory representatives for the Australian Department of Infrastructure, Transport, Regional Development and Local Government (DITRDLG) who administer the Act and Regulations on behalf of the Australian Government. The larger airports, by the very nature of their operations, tend to produce noise and hydrocarbons from aircraft. As such, the implementation of various elements of the environment strategy is important in displaying a proactive approach to manage the impact on the environment. The AESs prepared for the Perth and Jandakot airports address the following issues: Air quality Soil quality Water quality Noise emissions Waste Flora and fauna Waste management Heritage considerations.

The smaller airports, including those in rural and remote areas, do not normally prepare such detailed documents for their facilities. However, they have procedures in place for more immediate environmental issues such as fuel spills. Greenhouse gas mitigation Civil aviation accounts for about 2% of global emissions and this is expected to rise due to growth in the aviation sector. Ways to reduce emissions include improving aircraft fuel efficiency and air traffic management such as continuous descent approaches. A challenge for the aviation sector will be the impact of an ETS. If it results in subsidies for alternative modes of travel (e.g. fuel credit for heavy on-road transport businesses), there is a risk that the exclusion of the aviation industry from comparable assistance may have the effect of creating a structural competitive distortion in the market for passenger travel and freight. Major airports are actively involved in reducing greenhouse gas emissions by enhancing building energy efficiency, working to provide increased public transport and reducing road congestion. For example, Perth Airport has a five-year action program that includes the objective of the sustainable use of resources.210 An important driver by airport owners in reducing greenhouse gas emissions of their buildings is to position their assets as having low environmental impacts in order to attract environmentally-conscious tenants. Noise Noise concerns from airports have resulted in the imposition of curfews and restriction of land use at some interstate airports. The WA Government supports the continuation of Perth Airport’s curfew-free status.211

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4.4 Future challenges The challenges in achieving improvements in airport infrastructure are: Aligning on-airport development with local land-use plans. On-airport retail and

commercial developments at Perth Airport have caused significant problems for road users, off-airport businesses and airport users. The cause of this is outside the WA Government's control, as the airport is an Australian Government-leased airport and will require Government intervention to prevent this from occurring in the future. State Government planning also needs to appropriately incorporate the global trend towards major airports to become major business areas that integrate air facilities with business, industrial and commercial developments. Planned developments at Jandakot Airport could easily cause similar problems to the ones experienced at Perth Airport.

Addressing road transport congestion at Perth Airport. Expansion of the road network around Perth Airport is long overdue. The location of the airport and freight terminal within the context of the metropolitan area puts tremendous pressure on a few key road connections, namely the Tonkin Highway, the Leach Highway and to a lesser extent, the Roe Highway.212 The growth in road traffic to and from Perth Airport is already causing congestion and social impacts. The airport terminals are difficult to serve by public transport at present as the International Terminal is separated from Terminals 2 and 3 by the operational runways and aprons. The proposed consolidation of passenger operations to the new terminal facilities around the site of the existing International Terminal will improve the opportunity for viable public transport services to the airport, but will create further traffic problems.

Meeting long-term passenger and freight growth. In the short and medium terms, there is sufficient capacity at Perth Airport to meet expected growth. In the longer-term, additional taxiways and another runway will be needed. There is land at the airport to accommodate these upgrades.213

Maintaining appropriate returns at regional airports. A number of major regional airports will experience growth through resource development requiring new infrastructure. The low air passenger numbers in rural WA mean that passenger fees are high on a per capita basis; this is necessary in order to be commensurate with a reasonable rate of return and investment needs. Excessive fees and charges imposed by the airport may jeopardise route viability.

4.5 Report Card rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Airports C+ Not rated B B

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s airport infrastructure has been rated C+. This rating recognises that there has been significant investment in the Perth Airport although this has lagged behind the dramatic growth in demand. There is ongoing concern about the commitment to the timing and logistics of the International Terminal consolidation (Terminal WA) and the major road improvements around the airport (Gateway WA project). There has been an appropriate level of development at regional airports to meet changing demand, and incremental and sustained improvement in remote airport infrastructure due to the Regional Airport Developments Scheme. Positives that have contributed to the rating are: Expansion in the infrastructure at WA’s major and regional airports in line with demand Incremental and sustained improvement in remote airport infrastructure due to the RADS

grants Negatives that have contributed to the rating are: Funding challenges faced by regional and remote airports to upgrade their infrastructure

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Parallel scheduling of large aircraft services to regional airports resulting in stresses on airport infrastructure, notably brief periods of congestion followed by extended periods of low activity

Road congestion around Perth airport at certain times, notably morning and afternoon peak periods

Rapid growth and volatility of passenger numbers due to ‘fly in–fly out’ services Concern about road access and congestion at Jandakot Airport following the commercial

development of the billion dollar Jandakot City.

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71

WATER

Strategic water developments The last decade has seen an increasingly challenging water environment due to: Declining average rainfall due to a drying climate Increasing demand and competition for water resources due to growth in the population, and

expansion of the resource and agricultural sectors Increasing pressure on water for the environment due to the drying climate and increasing

demand for water. To address these problems, over the last five years the WA Government has undertaken a number of reviews. The resulting significant reports were the 2005 Irrigation Review Steering Committee’s Report, the 2006 Blueprint for Water Reform in Western Australia by the Water Reform Implementation Committee, the 2008 Inquiry into Competition in the Water and Wastewater Services Sector and the 2009 Inquiry into water resource management and planning charges. In response to these, the WA Government is pursuing a water reform program with the key elements being developing: A State Water Plan New water resources legislation Statutory water management plans including regional water plans A water metering program The State’s National Water Initiative Implementation Plan.214

A further major development was the creation of the Department of Water in late 2005. It became formally responsible for the functions from the abolished Water and Rivers Commission in early 2008 and the role of the Department is to manage the State's groundwater and surface water resources and ensure adequate water services. In 2007, the State Water Plan 2007 was released. Building on past plans, including the State Water Strategy (2003), it established broad strategic directions and policies and a framework for water planning. It included more than 100 actions to progress water resources management in WA by 2011.215 The reform of water resources legislation has progressed very slowly. It started in 2006216 and in 2009, the Department of Water released a discussion paper on water resources management options. It noted that existing Acts are inconsistent and have outdated provisions,217 with specific problems being that the existing legislation: Does not stop further allocation of water once an area has been fully allocated Creates a significant impediment to water trading due to the complexity and time consuming

nature of transferring licences Makes it difficult to manage water systems in a way that is adapted to match rainfall Is not able to deal effectively with water use by plantations and other activities that intercept

water Does not clearly define the regulatory powers available to reduce the volume of water that can

be extracted during a period of water scarcity.218

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72

To address this, the WA Government is developing two Acts – the Water Resources Management Act and the Water Services Act. Major advances have been made in developing the strategic water policy and planning frameworks. This set of policies and planning instruments is based on the realisation that water resources are limited and the previous approach to meeting demand by expanding traditional supplies, notably by building new dams, is no longer sustainable. It also recognises that sustainable environmental flows are essential in maintaining the natural environment, and that all water sources should be managed in an integrated approach. The documents that form WA’s natural water resource management are illustrated below. The documents that form the main elements of WA’s natural water resource management219

The table below describes the above documents. WA’s key water policy and planning documents220

Document type Description

Regional water plans Regional water plans are being developed by the Department of Water, are strategic in nature and have a long-term planning horizon. They: • Assess current water resource management and service delivery in the region • Identify current and forecasted future water availability and demand • Set priority actions to implement water policy and planning, improve water resource

management and establish water management plans.

Drinking water source protection plans

These plans are designed to protect water catchments and groundwater aquifers to minimise the risk of drinking-water contamination. They recommend protection strategies, such as the establishment of reservoir protection zones.

Drainage plans Produced by the Department of Water, these plans provide guidance to land-use planning to ensure better urban water management. They identify the natural movement of water across landscapes and mechanisms to improve the environment, land planning and the capacity of communities to implement best-management practices.

Floodplain plans These plans recommend approaches for the protection of people and property within flood-affected areas to minimise flood damage. They are produced by the Department of Water.

Waterways plans These plans are prepared by the Department of Water to identify the condition and threats to waterways and develop strategies to protect, restore and manage waterways. These plans may incorporate key issues that need to be resolved at a catchment scale.

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73

Document type Description

Water allocation plans and licences

These plans determine how much groundwater and surface water can be taken for domestic or commercial purposes while leaving enough water in the environment to meet ecological, recreational and cultural needs. The Department of Water is responsible for creating surface and groundwater allocation plans for each management area. There are 44 declared groundwater management areas, 40 surface water management areas and 14 irrigation districts.221 Licences are the statutory instruments that regulate individual water take and use. Water allocation plans provide the management framework and rules for licensing in a specific management area. As at 24 August 2010, there are 12,652 groundwater licences, 1,056 surface water licences and 182 permits in WA, across 747 groundwater resources and 159 surface water resources.222

Regional water plans have only been developed for some regions, as seen in the table below. Status of regional water plans

Region Water plan Date plan is expected to be, or was, completed

Kimberley region Kimberley regional water plan Draft published

Pilbara region Pilbara regional water plan Completed in 2010

Mid-west Gascoyne region Mid-West regional water plan Not available

Gascoyne regional water plan Not available

Swan-Avon and Goldfields region Perth-Peel regional water plan Draft published in 2010

Goldfields-Esperance regional water plan Not available

Wheat belt regional water plan Not available

Kwinana-Peel region Perth-Peel regional water plan Draft published in 2010

South-West region South West regional water plan Completed in 2010

Great Southern regional water plan Not available

South Coast region Great Southern regional water plan Not available

Goldfields-Esperance regional water plan Not available

Key government agencies in the water sector are: Department of Water (WA Government). The Department is the State’s water resource

manager and has three areas of responsibilities – water resource management, strategy and policy, and regulation, licensing and protection.

Department of Environment and Conservation (DEC) (WA Government). DEC has lead responsibility for protecting and conserving the State’s environment. Specific water responsibilities include managing natural resources, and protecting the environment by ensuring that discharges meet approved criteria.

Economic Regulation Authority (WA Government). The Economic Regulation Authority issues water service licences to entities supplying potable water, non-potable water, sewerage and drainage services. It is also responsible for approving Customer Service Charters, and monitors performance of water service providers through a compliance and performance reporting regime.

National Water Commission (NWC) (Australian Government). The NWC is responsible for driving progress towards the sustainable management and use of Australia’s water resources under the National Water Initiative. The Commission advises the Council of Australian Governments (COAG) and the Australian Government on national water issues and the progress of the National Water Initiative.

Department of Health WA (WA Government). DOH regulates health-related elements of drinking water, wastewater and recycled water. DOH reviews, interprets and applies the recommendations contained in the Australian Drinking Water Guidelines 2004, which are published, by the National Health and Medical Research Council. DOH requires water

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74

suppliers to monitor their systems and report the results to the DOH. All recycled water schemes must be approved by the Executive Director of Public Health prior to implementation.

Department of Sustainability, Environment, Water, Population and Communities (Australian Government). The Department is responsible for national water policy and resources, including progressing implementation of the National Water Initiative, and delivering irrigation infrastructure investment programs.

Centre for Excellence and Innovation in Infrastructure Delivery (CEIID) (WA Government). CEIID is a collaborative alliance between key infrastructure delivery agencies, government trading enterprises and other Government bodies. It was established in 2007 to improve collaboration, share knowledge and drive reform across a broad spectrum of activities associated with public works, infrastructure delivery and strategic asset management. CEIID is supported by the Program Management Office (PMO), a branch within the Department of Treasury and Finance.223

Significant water-related legislation consists of: Country Areas Water Supply Act 1947 Country Towns Sewerage Act 1948 Land Drainage (Validation) Act 1996 Land Drainage Act 1925 Metropolitan Water Supply, Sewerage, and Drainage Act 1909 Metropolitan Water Authority Act 1982 Rights in Water and Irrigation Act 1914 Water Agencies (Powers) Act 1984 Water Boards Act 1904 Water Services Licensing Act 1995 Water Supply, Sewerage, and Drainage Act 1912 Waterways Conservation Act 1976 Water Legislation Amendment (Competition Policy) Act 2005 Water Resources Legislation Amendment Act 2007.

Water services in WA are licensed under the Water Services Licensing Act 1995. The Act defines four classes of water operating licence: water supply services (both potable and non-potable), sewerage services, irrigation services and drainage services. The Economic Regulation Authority has licensed across the State 32 potable/not-potable licensees, 22 wastewater licensees and four irrigators.224 The areas that these operate in are shown in the figure below.

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75

Economic Regulation Authority’s water services controlled and operating areas225

Consumptive water use Total consumptive water use in WA in 2008 was 2,286GL. Of this, 1,494GL was self-supplied mostly through bores, on-farm dams and waterway extractions. 7,92GL was obtained through an urban scheme supply or irrigation cooperative.226 As seen in the figure below, the largest water users are irrigated agriculture and the mining industries. Irrigation water is principally used in the south-west for growing horticultural products and irrigating pastures for beef and dairy cattle, mango, bananas and grapes in the Carnarvon Irrigation Area and sandal wood in the Ord River Irrigation Area.227 Water is used in mining for many different purposes notably mine de-watering, minerals processing, power generation cooling and potable supply to camps.228 229 Between 2000 and 2008, the yearly increase in water use across the State was 3% on average.230 This rate is higher than the population growth and is primarily due to the expansion of the mining and agriculture sectors.231

Wa

76

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77

5 Potable water

5.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Potable water B- B- B- C

This rating reflects the improvement in water security in Perth due to the construction of major new water supplies. However, planning and investment across regional WA continues to be an issue. The advances are noteworthy given the drying climate and the increasing demand arising from economic and population growth. The water infrastructure in newer metropolitan areas and expanding towns is of a high quality, however, assets are ageing in Perth’s CBD and older towns. While the long-term water planning approach for southern WA is excellent, there is concern about the availability of funding over the long term to deliver it. Water systems in regional towns and remote areas are of a reasonable standard, albeit lower than Perth, given their environmental and financial constraints, and legacy infrastructure. Since the last Report Card, the major potable water developments in WA have been: Ongoing drying of the climate Increased demand for potable water The introduction and partial implementation of water sector reforms Introducing water source diversity in the Perth region, thus reducing dependence on the

Gnangara Mound Development of 50-year water plan by the Water Corporation Implementation of a number of water augmentation projects Reduction in average water consumption per residential property in Perth Incremental improvements in drinking water quality across the State due to the commissioning

of new water treatment facilities The introduction of Permanent Water Efficiency Measures Reduction in the number of water quality complaints Change in water pricing to make costs reflect the cost of new investment.

Recently completed and in-progress major infrastructure projects include: Perth Seawater Desalination Plant Southern Seawater Desalination Plant Construction or upgrading of a number of water treatment plants.

Challenges to improving potable water infrastructure include: Understanding climate change impacts on water Accepting that water competition will increase, requiring significant changes in the use of water Reducing urban demand Maintaining continual emphasis on water efficiency and increasing potable water substitution

as water supplies increase Improving the health of waterways Ensuring that there is sufficient private sector capacity to deliver the Water Corporation’s

program of work Ensuring that the Water Corporation maintains sufficient in-house capacity to manage the large

number of complex projects Ensuring that there is no water deficit in the Integrated Water Supply Scheme Improvement in the aesthetic quality of water.

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This section does not address the use of wastewater, recycled water or stormwater as a substitute for non-potable water, as these issues are discussed in the Wastewater and the Stormwater sections.

5.2 Infrastructure overview

5.2.1 System description WA’s potable water infrastructure can be categorised into: The Water Corporation’s water supply schemes Other water supply schemes.

The Water Corporation’s water supply schemes The Water Corporation is the State-owned supplier of water, wastewater and drainage services. It supplies water to homes, businesses and farms, as well as providing bulk water to irrigation areas. It supplies water services to 97% of the State’s population, and manages more than $12.3 billion of water supply, sewerage and drainage infrastructure.239 It owns and operates 110 dams and reservoirs, and manages 245 water supply schemes across the State. As well as being responsible for infrastructure management, it is also responsible for water supply planning. Operationally, it divides the State into six administrative areas that generally align with the Regional Development Commission boundaries. These regions and the main pipelines are seen in Figure 5.1. Table 5.1 describes the characteristics of the regional water schemes. Table 5.1: Water Corporation’s regional water schemes240

Regions Description and recent developments

Agricultural and Goldfields Regions

The Goldfields and Agricultural Water Supply (GAWS) supplies water to 33,000 rural and town services, from outer metropolitan Mundaring, through the Wheat belt area, to the Goldfields. The water is used for household and commercial water supply, farm water supply for stock, and mineral processing. The water is sourced from Mundaring Weir near Perth and transported 500km by pipeline. Recent developments include: • A 30ML water tank just west of Northam, installed to improve the hydraulic efficiency of

the GAWS and improve security of water supply for communities west of Northam • A $21 million pipeline, recently laid through the centre of Kalgoorlie • The construction of the Mundaring Water Treatment Plant costing $205 million and

expected to be operational in 2013 • Significant increase in storage capacity in Kalgoorlie • Ongoing refurbishment of the GAWS pipeline – completing around 12-15km per annum

at a cost of $6.0-7.5M/annum.

Great Southern Region The Great Southern Towns Water Supply (GSTWS) scheme obtains most of its water from Harris Dam, however, approximately half the localities on the scheme have local sources (primarily surface water), which can contribute to supply if required. The Lower GSTWS, which supplies Albany, Mount Barker and Kendenup has two sources including a series of borefields to the south-west, and a surface water source to the north-east of Albany. The remaining localities in the region have local supplies and are not connected to a major scheme. Recent developments include: • The commissioning of a $1.2 million water treatment plant in 2008 in Wave Rock near

Hyden, providing the community with greater security and quality of water supply241 • The commissioning of the Binduli Reservoir pipeline linking the reservoir to the

Kalgoorlie-Boulder Water Supply Scheme, doubling its previous storage capacity to meet future demand, costing $21 million

• Upgrading of the Denmark WTP.

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Regions Description and recent developments

Mid West Region The Mid West Region is serviced by separate groundwater sources not connected to a scheme except for Yuna, near Northampton, which is supplied from a surface catchment. Recent developments include: • The commissioning of a $12 million reverse osmosis desalination and water treatment

plant in Coral Bay, providing a safe and reliable water supply that will help ensure a viable future for the settlement and the nearby Ningaloo Marine Park; the plant treats groundwater from a new artesian bore.

• Connection of Northampton to the Geraldton town water supply scheme. • Commissioning of a high efficiency reverse osmosis treatment plant at Yalgoo. • Commissioning of an electrodialysis reversal plant at Wiluna.

North West Region The West Pilbara Water Supply Scheme supplies customers in Karratha, Dampier and the neighbouring towns of Roebourne, Wickham and Point Samson. The scheme has two sources, Harding Dam and Millstream bores. The remainder of the supplies in the North-West Region are independent surface and groundwater sources not connected to a major scheme. Recent developments include: • Commissioning of a $15 million water treatment plant in Wyndham that can operate all

year round by treating high turbidity source water during cyclones and heavy rain when mud and silt are washed into the East Kimberley town’s Moochalabra Dam; the project included new ultrafiltration treatment, ultraviolet disinfection unit, and a new pipeline to the town storage tank.

• Improvements to the Broome system, including new bores, a pump station and pressure main.

South West Region Towns in the South West Region obtain water from a number of surface and groundwater sources that are largely independent and not connected to a major scheme. Harvey, Waroona, Hamel, Binningup, Myalup and Yarloop are exceptions, being supplied from the Integrated Water Supply Scheme. Recent developments include: • Drilling of a new Nannup bore and constructing a transfer main from Nannup to

Millstream Dam for the Bridgetown town water supply • Upgrading of the Margaret River WTP

Perth Region See below

The Perth region accounts for the majority of water consumed by Water Corporation customers, as seen in Table 5.2. Given its importance, it is discussed in detail below the table. Table 5.2: Water Corporation’s water scheme statistics242

Region Properties served

Properties connected

Water supply services

Length of mains (km)

Water supplied

(ML)

Water consumption per property connected

(kL)

Perth 820,915 707,492 615,069 12,861 245,460 307

Agricultural 23,151 18,906 23,978 8,500 11,600 519

Goldfields 26,459 23,366 21,333 1,021 14,678 577

Great Southern

38,027 31,823 31,891 3,790 12,359 303

Mid West 47,896 37,065 33,292 2,673 20,107 447

North West 35,741 30,732 23,438 1,401 29,962 939

South West 100,587 81,225 73,704 2,670 27,781 302

Total 1,092,776 930,609 822,705 32,916 361,947 344

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Figure 5.1: Water Corporation’s regions and transmission pipelines243

Integrated Water Supply Scheme (IWSS) The IWSS is a network of major water supplies and pipelines, and provides potable water to more than 1.5 million people across Perth, South West, Kalgoorlie-Boulder and the Wheatbelt, Goldfields and Agricultural regions. It supplies over 75% of the State’s population. Water for the IWSS comes from three sources: Surface water, which supplies 25% to 45% of demand. This water is obtained from eight major

dams and nine pipehead damsh in the Darling Range. The main dams are Mundaring Weir, Victoria, Canning, Wungong, Serpentine, North Dandalup, South Dandalup, Stirling and Churchman’s Brook. (Mundaring Weir normally only supplies water to the Goldfields and Agricultural Region.)

h Pipehead dams do not store large volumes of water, but collect winter stream flows for transfer to existing supply systems.

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Groundwater, which supplies 35% to 50% of demand. This water is extracted from the natural aquifers in the deep sands of the coastal plain. Groundwater is drawn from shallow and deep aquifers using 180 bores located in Perth’s northern suburbs and pine plantations, Water is treated at groundwater treatment plants at Jandakot, Mirrabooka, Wanneroo, Neerabup, Lexia and Gwelup.

Desalination, which supplies 15% to 20% of demand. The Perth Seawater Desalination Plant in Kwinana produces on average 130ML/day of water.244

Figure 5.2 shows the current and future water sources in the Perth region. Figure 5.2: Existing and possible future water sources in the Perth region245

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Gnangara Mound The Gnangara Mound is the most significant ground water source supplying about 95% of all groundwater. Located north of Perth, it comprises: A superficial aquifer (up to 60 metres deep) which provides water for public supply, agriculture,

forestry, market gardens, local government authorities and garden bore users The confined Leederville aquifer (up to 500 metres deep) and the confined Yarragadee aquifer

(over 700 metres deep), both of which are used primarily for public water supply.246 The Water Corporation extracts about 150GL per year from the Gnangara Mound, with more being taken during dry periods when dam levels are lower, and less during wet periods when surface water is more available. The Water Corporation extraction accounts for only about 40% of the estimated total water abstracted from the Gnangara Mound. The rest is extracted by agriculture, forestry, market gardens, local government authorities and garden bore users.247 There are some 176,000 backyard bores in Perth with the ground water mostly being used for grass watering.248 The water quality of the superficial aquifer requires significant treatment due to its geochemical properties for potable water use. The confined aquifers are far more protected as they have an impermeable layer above them. However, the water can have higher salinity and elevated temperature. Consequently, the treatment of the water depends on the bore from which it comes.249 Extracted water is treated at groundwater treatment plants at Gwelup, Jandakot, Lexia, Mirrabooka, Neerabup and Wanneroo before it enters the distribution system. The groundwater levels in the Gnangara Mound have declined since the late 1960s due to climate change, increased abstraction for public and private use, interception of rainfall by the pine plantations, and a reduced frequency of burning natural woodlands.250 Given its significance to Perth’s water supply, the WA Government is undertaking the Gnangara Sustainability Strategy to ensure that extraction levels are sustainable and its water quality is protected. The Strategy is expected to be finalised in 2010/11. Perth Seawater Desalination Plant The Perth Seawater Desalination Plant in Kwinana commenced supplying water in November 2006, and cost $387 million.251 It was the first plant in Australia to provide desalinated water for large-scale public consumption. It takes sea water from Cockburn Sound, processes it and transfers the potable water to Thomsons Reservoir, or stores it in Canning Dam during periods of low demand.252 The reverse osmosis plant power requirements are offset by power from a wind farm north of Perth.253 The plant has increased production of water each year. Desalinated water initially accounted for 10.5% of Perth’s total sourced water in 2007/08, increasing to 12.5% (43.38GL)254 in 2008/09255 and 48GL in 2009/10.256 It was awarded the Desalination Plant of the Year as part of the Global Water Awards in 2007. Southern Seawater Desalination Project Perth’s second desalination plant is currently under construction and is due for completion in September 2011.257 The Southern Seawater Desalination Plant between Binningup and Myalup, 150km south of Perth, is designed to produce 50GL/year with a capacity to expand to 100GL/year. The plant and associated infrastructure will cost $955 million.258 It will feed water into Perth’s Integrated Water Supply Scheme near Harvey, approximately 30km inland. It requires a pump station to be built at Ravenswood and connecting pipelines.259 When the plant is completed, the combined output of the two desalination plants will supply more than 30% of Perth’s water supply.260 In May 2010, the Minister for Water stated that with the completion of the Southern Seawater Desalination Plant, Perth would not require another major drinking water source until 2020.261

Potable water

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Other water supply schemes There are two large towns where water is not supplied by the Water Corporation. These are Bunbury and Busselton, which are supplied by Aqwest and Busselton Water respectively. Both are government statutory authorities operating under the Water Boards Act 1904. Aqwest services 15,500 connected properties and manages $76 million of infrastructure. Busselton Water services 11,500 connected properties and manages $42 million of infrastructure.262 There are two Economic Regulatory Authority licensed small town water suppliers in WA. Hamersley Iron services Paraburdoo and Tom Price using artesian bore water, and also services Dampier using bulk water supplied by the Water Corporation. In 2008/2009, Hamersley Iron had 2,402 connections and supplied 3.272GL. Pilbara Iron, a division of Rio Tinto, is the asset manager for the water supply schemes operated by Hamersley Iron.263 Rottnest Island Authority operates the potable water scheme on the island. It sources its water from saline bores and treats it in a desalination plant. In 2008/2009, it had 421 connections and supplied 146ML.264 Water services for small remote indigenous communities are provided either through the Remote Area Essential Services Program (RAESP) or are self-supplied. There are 91 indigenous communities in the RAESP scheme. This scheme, which covers both water and electricity supply, is managed by the Department of Housing and Works. It provides contracted maintenance services every six to eight weeks, monthly water testing and certain capital works. One goal of the program is to train local personnel to undertake the day-to-day operations and maintenance of essential services. These include taking meter readings, checking fuel levels, checking fences and locks. There are 155 small communities in WA, generally with a population less than 50, where the water is essentially self-supplied. This means that they are responsible for the operation and maintenance of their own water supply. However, there is an emergency breakdown service that the communities can access. This is jointly funded by the State and Australian governments and administered through the RAESP program. Water pricing The WA Minister for Water sets water charges for the Water Corporation, Aqwest and Busselton Water under the Water Agencies (Powers) Act 1984, and considers recommendations made by the Economic Regulation Authority. For the last two decades, WA’s metropolitan water prices have been based on a user pays basis and this approach reflects the cost of providing the service and provides a mechanism to encourage consumers to reduce their consumption. In the 2008 WA Government budget, it was announced that commercial metropolitan customers would have their usage charges based on the long run marginal cost (LRMC).265 LRMC is the incremental cost of adding more supply and factors in the operating, capital and externality costs. The LRMC and the short run marginal cost (i.e. the variable costs associated with producing another unit of water) are identified in Table 5.3. The main reason for the cost difference in the short run marginal cost between desalination and other sources is the cost of electricity. The LRMC charges will be phased in by 2013/14.

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Table 5.3: Water supply costs for Perth region266

Source Short run marginal cost (per kL)267 Long run marginal cost (per kL)

Dam water $0.10 Not applicable – no viable dams

Ground water $0.20 $1.00

Perth Seawater Desalination Plant $0.30 Not applicable – cannot be augmented

Southern Seawater Desalination Plant $0.50 $2.00268

New desalination sites $2.20

Groundwater Replenishment $2.00

Figure 5.2: Annual water bill for residential customers using 200kL for utilities with 100,000 plus connected properties 2008/09269

WA’s water consumption Figure 5.3 shows the sourced water provided by the Water Corporation to WA’s cities and towns. Total sourced water includes water abstracted from water sources that include surface water, groundwater, desalination, recycled water and water received from a bulk supplier. In 2008/09, it was 356,226ML.270 Between 2003/04 and 2008/09, the growth was about 3% per year, higher than the yearly population growth, which is under 2% over that period. This difference between increase in consumption versus increase in population is largely driven by the increase in water use for mining and agriculture. In 2008/09, about 76% of all water was supplied to Perth.271 Figure 5.3: Total volume of Water Corporation water from all sources272

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Figure 5.4 shows that the greatest volume of water supplied is ground water, followed by surface water. The growth in desalinated water is noticeable. Figure 5.4: Sources of Water Corporation water by volume for WA cities and towns273

Table 5.4 shows that the average residential water consumption per property over the State has declined over the last three years. Perth’s average consumption is significantly less than the average of all towns. However, it should be noted that there is considerable variation in consumption across regional towns due to different environmental conditions and water restrictions. Denmark has the lowest consumption at 152kL per property and Port Hedland the highest at 624kL.274 Perth’s per capita consumption is higher than that of the eastern Australian States because outdoor watering is required more often due to Perth’s limited rainfall period and the fact that the sandy soil does not retain moisture. In addition, most of the other capital cities had more stringent water restrictions than Perth.275 Table 5.4: Average annual residential water supplied per property (kL/property)276

2006/07 2007/08 2008/09 Percentage Change (%)

Average of all towns 382 352 346 -1.7

Perth 281 268 277 3.4

Average of regional towns 385 355 348 -2.0

Water conservation measures Water conservation measures have become an integral part of managing water supply in WA. Developments over the last few years have included: Application of water restrictions in times of drought or emergency. The seven levels of water

restrictions allow a graduated approach to reducing non-essential water use in times of reduced water availability. The application of Stage 4 restrictions in the IWSS has saved about 45GL per year.277

Introduction of Permanent Water Efficiency Measures from 1 October 2007 with the passing of the Water Agencies (Water Use) By-laws 2007. These measures make certain water restrictions permanent, such as permanent Stage 4 restrictions (sprinkler roster two days a week) for customers using reticulated water in the Perth metropolitan area and towns south of Jurien.278

Introduction of the Winter Sprinkler Bans. This is a permanent measure in force from 1 June to 31 August each year for Perth, Mandurah and some towns in the south-west.

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Requirement for large consumers to complete annual water management assessments and submit water efficiency management plans. This requirement was introduced on 1 July 2007 and applies to organisations that consume over 20ML/year.

Requirement for local governments to develop water efficiency plans, and ensure that water allocation licences are amended to include daytime sprinkler ban conditions.279

Close working relationship developed by the Water Corporation and the Department of Water with the plant industry, turf industry and developers, to reduce water consumption.

5.2.2 Policy and governance Relevant water policy documents and legislation are detailed at the front of this chapter. The main regulatory controls for water service providers are: Operating Licences. All water service providers must obtain a licence from the Economic

Regulation Authority. Water resource access agreements. The Department of Water determines the service

provider’s level of water extraction from natural surface and groundwater sources. The allocation is stated in Water Management Plans and the allocation process is informed by the Statewide Policy No. 5 – Environmental water provisions policy for Western Australia. This policy describes the principles and processes to determine how much water should be retained for the environment, or what water-level regime should be maintained when allocating and reviewing water-use rights. The Rights in Water and Irrigation Act 1914 provides the statutory basis for planning and allocation of water. Licences are the statutory instruments that regulate individual take and use.i

Drinking water quality standards. The Department of Health establishes requirements for drinking water management and monitoring based on the Australian Drinking Water Guidelines 2004 (ADWG). The Water Corporation has a Memorandum of Understanding with the Department of Health defining the requirements for compliance with the microbiological, health, chemical and radiological parameters specified in the ADWG.280

The WA Auditor General in 2009 stated that there has been an overall improvement of the State’s water resource management framework during the past six years, including improved understanding of water resources.281

5.2.3 Sector trends Major capital works programs The Water Corporation spent about $4.2 billion on capital expenditure between 2005/6 and 2009/10, and intends to invest over $3.5 billion over the next four years.282 This future expenditure figure includes a reduction of $560 million as instructed by the WA Government in mid-2009 due to the need to reduce the State’s Budget in response to the global financial crisis.283 The capital works expenditure is illustrated in Figure 5.5. The expenditure is mainly driven by population growth, water source development in response to the drying climate, increasing regulatory requirements and asset replacement.284

i Water policies and plans.

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Figure 5.5: Water Corporation’s potable and wastewater capital works expenditure285

Individual future major capital works projects are listed in Table 5.5. Table 5.5: Major Water Corporation contracts greater than $10 million between 2010 and 2014286

Project Title Estimated Total Cost (million)

Tender to Market (indicative)

Mundaring Weir Outlet Works Upgrade $29.1 Q4 2010

Bridgetown: Millstream Dam Raising $24.3 Q1 2011

Margaret River: Yarragadee Source $28.7 Q3 2011

Margaret River: Water Treatment Plantj $38.1 H1 2012

Gnangara reservoir Pond – 125ML $43.4 2013

Cunderdin 120ML Storage $44.8 2014

Metro Trunk & Distribution main renewal $58.6 2014/16

The last decade has seen a major change in the way that the Water Corporation delivers infrastructure projects. Traditionally, they have been delivered by in-house staff or with the construction component of a project being contracted out. Today, the Water Corporation is increasingly using alliance contracts and other non-traditional arrangements. An alliance contract is one where the client and service delivery partners work collaboratively to deliver the outcomes by sharing risks and decisions making. Table 5.6 lists the main non-traditional relationship contracts currently in place with the Water Corporation. Table 5.6: Water and wastewater relationship contracts with the Water Corporation287

Relationship contract title Partners

Supervisory Control and Data Acquisition – Integrated Control Engineering (ICE)

ABB Australia

Supervisory Control and Data Acquisition (SI Alliance) Serck Controls

Bunbury Wastewater Treatment Plant Amplification Tenix

j This is part of a major upgrade of the Margaret River Regional Water Supply Scheme, which includes a new water source to complement the existing Ten Mile Brook Dam, storage tank, pipelines and water treatment plant.

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Relationship contract title Partners

Automation and Centralisation of treatment plants – Metropolitan Area (A+C)

Leicon Notley GHD Serck

Pipelines and Pump Stations – Metropolitan, Goldfields, Agricultural and South West regions (PPS Partnership)

Transfield SKM

South Metropolitan Wastewater Treatment Plants (Sunset Coast Water) John Holland Worley Parsons KBR

Metropolitan Wastewater Treatment Plants (W2W Alliance) Black & Veatch SKM Theiss

Alkimos Wastewater Scheme – Metropolitan Area Multiplex Macmahon Zublin

Southern Seawater Desalination Project (Southern SeaWater Alliance) Tecnicas Reunidas Valoriza Agua AJ Lucas WorleyParsons

The Water Corporation is currently considering extending this alliance approach to operating and maintaining Perth’s water system. The project to do this, Metropolitan Operation and Maintenance Integrated Alliances Project, will contain work valued at over $700 million over a five-year period. The alliance will see public sector employees working alongside alliance staff in the management and operations of the alliance.288 Addressing the long-term water challenge In 2009, the Water Corporation released its 50-year Water Forever: Towards Climate Resilience strategic plan to address the challenges caused by reduced water inflows due to climate change, and increased demand for water resources. It was predicted on a climate scenario that assumes a 20% decline in rainfall by 2030, and a 40% decline in rainfall by 2060. It proposes solutions that by 2060 will involve: Reducing water use by 15% by 2030 and 25% by 2060 Increasing wastewater recycling by 30% by 2030 and 60% by 2060 Developing 70GL to 100GL of new water sources by 2030.289

5.3 Performance Key parameters to assess infrastructure performance are the levels of services, maintenance levels, water quality indicators and environmental management. Another performance measure is the achievement of Operating Licence conditions as stipulated by the ERA. Levels of service include water breaks and average duration of interruptions. Figure 5.6 shows that the number of water main breaks is higher in regional towns compared to Perth, and that in Perth, the number of breaks has been increasing due to the large cohort of asbestos cement pipes within the system that are now entering the last quartile of their expected life.290 The area with the highest number of breaks is Port Hedland with 56.0 breaks per 100km of water main and this is due to ageing pipes. Mandurah has the lowest with 4.2 breaks per 100km of water main.291 The performance target for breaks for the Water Corporation is 20 as a State-wide average, and it has achieved this for the last five years.292 Over the last five years, the Water Corporation has replaced about 100km of water mains in the poorest condition, including the majority of the galvanised steel mains that had reached the end of their life.293 This will reduce the number of water main breaks in the future. For small water supply schemes in 2008/09, Hamersley Iron recorded 21.7 breaks and Rottnest Island Authority recorded 10.0 breaks.294

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Figure 5.6: Water main breaks per 100km of water main for large water schemes295 296

Figure 5.7 shows that compared to similar-sized utilities, the frequency of water main breaks for the Water Corporation is very low. Figure 5.7: Water main breaks per 100km of water main for utilities with 100,000+ connected properties297

Another performance indicator that reflects infrastructure quality is the rate of water loss. Water losses occur due to leakage from pipes, fittings and water services, and pipe breaks. Water losses are measured using the Infrastructure Leakage Index, which takes into account factors such as length of main, number of connections, connection density, operating pressure, meter errors, theft and fire fighting, so that it can be used to compare different water networks. A level of 1 indicates that it is achieving the theoretically lowest possible level of leakage that could be achieved. Index values lower than 1.5 are deemed to be excellent while 1.5 to 3.5 are categorised as good to fair.298 Table 5.7 provides the Infrastructure Leakage Index for the Water Corporation. By Australian standards, the leakage performance is very good. Table 5.7: Infrastructure Leakage Index for Water Corporation299

2004/05 2005/06 2006/07 2007/08 2008/09

Infrastructure Leakage Index

1.6 1.7 1.5 1.7 1.6

The Water Corporation is pursuing a range of initiatives to reduce water loss described under its Water Loss Management Framework, including a pressure reduction program and active leak detection program. It has recently completed pressure reduction trials in three Perth suburbs and achieved water savings ranging from 12% to 19%. Based on the trial results, the Water Corporation

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is currently preparing a business case for a broader implementation of pressure reduction across the metropolitan area. In addition, active leak detection trials were also carried out across four Perth suburbs with promising results in terms of ‘hidden’ leaks identified. Funding has been allocated by the Water Corporation for a program of leak detection in both the Perth and regional areas for the next three years.300 Figure 5.8 details water losses per connection for water utilities with more than 100,000 connected properties, and indicates that the losses per connection of the Water Corporation was relatively high compared to similar sized utilities nationwide. It is expected that the focus on pressure reduction and leak detection will see an improvement in performance in this area. Figure 5.8: Water losses for utilities with 100,000+ connected properties (litres/service connection/day)301

The average duration and frequency of an unplanned water supply interruption provides an indicator on condition of the water network and the network management. Table 5.8 shows the average duration information for the last two years. It shows that the average duration of unplanned interruptions is higher in Perth than in regional towns. The highest duration was in 2008/09 was in Pinjarra, which recorded 242.0 minutes, and the lowest in Kununurra with 15.0 minutes.302 Table 5.8: Average duration of an unplanned water supply interruption (minutes)303

Data 2007/08 2008/09

Average of all towns 99.7 91.0

Perth 132.4 141.0

Average of regional towns 98.7 89.4

Table 5.9 shows the average frequency of unplanned interruptions. Perth customers experienced far fewer interruptions than customers in regional towns. The highest number of interruptions in 2008/09 was recorded at Pinjarra, which experienced 1,312 per 1,000 properties.304 Table 5.9: Average frequency of unplanned interruptions (per 1,000 properties)305

Data 2006/07 2007/08 2008/09 Percentage Change %

Average of all towns 149.2 132.4 165.2 24.8

Perth 63.5 66.0 67.5 2.3

Average of regional towns 151.9 134.6 168.4 25.1

The Water Corporation reports on a continuity measure defined as the percentage of properties not affected by interruption greater than one hour. Table 5.10 shows that it has exceeded the 75% target over the last five years.

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Table 5.10: Water Corporation’s continuity target306

Measure 2005 2006 2007 2008 2009 Actual

2009 Target

Continuity – properties not affected by interruption >1 hr 88.9% 86.6% 88.6% 88.7% 89.2% >75%

For the small water supply schemes, in 2008/09, Rottnest Island Authority recorded 10.0 water main breaks per 100km of water main and an average frequency of unplanned interruptions of 14.3 per 1,000 properties. Hamersley Iron recorded 21.7 breaks and an average frequency of unplanned interruptions of 3.3.307 Water systems have their water continuously monitored and assessed in accordance with the Australian Drinking Water Guidelines (ADWG). The monitoring covers biological, microbiological, physical and chemical parameters of the water supplied, using samples from dams, treatment plants, local reservoirs, and the garden taps of consumers. The key performance measure for microbiological water quality is the bacteria count of Escherichia coli (E. coli). The presence of E. coli means that water may be contaminated with faecal material. The ADWG’s requirement for E. coli is that ‘at least 98% of scheduled samples contain no E. coli’.308 A limitation of using the E. coli indicator is that while total coliforms are the most sensitive, they are the least specific indicator group for faecal contamination. Water recently contaminated by faeces will always contain coliforms, but as some coliforms also occur naturally in soil and vegetation, coliforms may sometimes be present in water in the absence of faecal contamination. Coliforms other than those of faecal origin can be present in drinking water as a result of the presence of biofilms on pipes and fixtures or contact with soil as a result of fractures or repair works.309 All large water supply systems have achieved 100% microbiological compliance over the last five years.310 Compliance with health-related chemical guidelines is also 100% in 2008/09.311 The Water Corporation’s health-related chemical performance over the last five years is detailed in Table 5.11. Table 5.11: Compliance by Water Corporation with chemical health requirements312

2005 2006 2007 2008 2009

Chemical health compliance for metropolitan and country regions 98.7% 99.8% 99.7% 100.0% 100.0%

As seen in Table 5.12, over the last few years, there has been a State-wide decline in the number of water quality complaints regarding discolouration, taste, odour, stained washing, illness or cloudy water. This reflects the improvement in water treatment plants. Table 5.12: Water quality complaints (per 1,000 properties)313

2006/07 2007/08 2008/09 Percentage Change (%)

Average of all towns 5.8 4.3 3.7 -14.0

Perth 6.8 6.0 6.5 8.3

Average of regional towns 5.8 4.3 3.6 -16.3

One area of improvement relates to the aesthetic quality of water. In 2008/09, less than 50% of the Water Corporation’s 245 water systems met all of all the aesthetic guidelines all the time.314 At regular intervals, water service providers are required produce an Asset Management System Review and Operational Audit to identify if they have met their Operating Licence conditions as stipulated by the ERA. The studies all found that the water service providers had an acceptable

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level of compliance with their Operating License requirements, and all were improving their Asset Management Plans.315 Potable water on remote aboriginal communities Most remote communities have developed around a regular water source, notably bores. The community has often developed ad hoc, resulting in the location of septic tanks, wastewater, fuel storage, landfills and other sources of contamination often being too close to the water source. As a result, heavy rains, fires or other events can allow contamination to enter the water source. To address this problem, the WA and Australian Governments have developed a range of tools and assistance packages to improve the quality of water infrastructure in these communities. This is done through providing advice and assistance in the selection of bore location, their design and construction, and their operation and management including water quality testing.316 In April 2010, the Australian Government announced that it will be funding $11 million of water projects in Ardyaloon and Warmun.317

5.4 Future challenges The challenges in achieving improvements in potable water infrastructure in WA are: Understanding climate change impacts on water. WA is leading the nation’s understanding

of the impact of climate change on natural water resources as it has been experiencing a drying climate longer than the eastern States. Continual work is required to improve this understanding and incorporate the findings into water supply and water resource planning.

Accepting that water competition will increase, requiring significant changes in the use of water. Given the increasing demand for water, the declining availability of natural water sources and the existing over-allocations, decisions will be required to ration natural water in the future. The area of the State most affected by these problems will be the southern areas. Balancing supply and demand is likely to involve curtailing the use of water for irrigated agriculture.

Reducing urban demand. Perth’s per capita water consumption is one of the highest of the Australian capital cities. While more water can be supplied through further source development, the cost of doing so is very high. Reducing demand, rather than increasing supply, is a much more cost effective way in addressing water constraints.

Improving the health of waterways. With the development of water-sharing plans for surface water and groundwater, there is now the opportunity to develop sustainable water extraction levels, and thus a mechanism to improve the health of waterways. However, implementing this will require significant political and community support due to the disruption it may cause.

Ensuring that there is sufficient public and private sector capacity to deliver the Water Corporation’s program of work. The size of the Water Corporation’s forward program of work is significant and requires large-scale capacity. Given the size and the competition for skilled staff from the resources sector, ensuring that there is sufficient capacity to undertake the Water Corporation’s projects will be a challenge.

Implementing Water Forever. The 50-year plan, Water Forever: Towards Climate Resilience, establishes ambitious targets that need to be achieved to prevent a gap between supply and demand. The measures not only require large investments but also a significant social and economic change in water use. For example, it requires reducing water consumption per person in a household to just 85KL/year by 2030, and it may require irrigated land to be scaled back. To be successful, this will need to be a whole-of-government and community approach.

Improvement in the aesthetic quality of water. There are a high number of water systems that do not meet the aesthetic guidelines of the ADWG. Improvements to catchments, water treatment plants and other elements of the water system are required.

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5.5 Report Card rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Potable water B- B- B- C

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s potable water infrastructure has been rated B-. This rating reflects the improvement in water security in Perth due to the construction of major new water supplies. However, planning and investment across regional WA continues to be an issue. The advances are noteworthy given the drying climate and the increasing demand arising from economic and population growth. The water infrastructure in newer metropolitan areas and expanding towns is of a high quality, however, assets are ageing in Perth’s CBD and older towns. While the long-term water planning approach for southern WA is excellent, there is concern about the availability of funding over the long term to deliver it. Water systems in regional towns and remote areas are of a reasonable standard, albeit lower than Perth, given their environmental and financial constraints, and legacy infrastructure. Positives that have contributed to the rating are: Consistent good performance of the water service providers compared to national comparators Improvements in the quality of water supplied, and increased investment in water infrastructure

in rural areas Improving water conservation and efficiency programs Continuing significant investment in source and system capacity expansion, limiting the impact

of water restrictions Improving water governance and policy Water Forever initiative, which takes a 50-year view.

Negatives that have contributed to the rating are: Limited success in reducing per capita water consumption The difference in water supply outcomes between Perth and regional towns The ageing of water infrastructure in Perth’s CBD and older towns Decline in the forward capital works budget of the Water Corporation The lack of progress in developing new water legislation.

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6 Wastewater

6.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Wastewater B B- C+ C-

This rating recognises there has been an improvement in wastewater infrastructure in terms of environmental outcomes and operational performance across the State. However, the delay to complete the infill sewerage program and the slow increase in water recycling in Perth are notable deficiencies. Since the last Report Card, the major sewerage and recycled water sector developments in WA have been: Connection of tens of thousands of metropolitan and regional septic tank users to reticulated

sewerage systems through the Infill Sewerage Program Reduction of sewage overflows near Perth’s waterways through the Wastewater Overflow Risk

Management Program Start of groundwater replenishment trial using recycled water Inquiry into Pricing of Recycled Water in Western Australia (ERA, 2009) State Water Recycling Strategy 2008.

Recently completed and in-progress major infrastructure projects include: Commissioning of a number of wastewater treatment plants Increase in distribution to 6GL/year of recycled water from the Kwinana Water Reclamation

Plant. Challenges to improving wastewater and recycled water infrastructure include: Raising the standards of sewerage infrastructure in regional towns Phasing out property-based charging for wastewater Maintaining capacity in wastewater systems to keep pace with growth in number of services Developing financially feasible water recycling schemes due to the high costs of reticulation

and treatment under conservative regulations Keeping up with increasingly stringent environmental standards.

6.2 Infrastructure overview

6.2.1 Wastewater system description Wastewater is produced by domestic households and by businesses/industrial operations, where it is known as trade/industrial waste. Wastewater systems are made up of reticulation mains, service branch lines, maintenance holes (manholes), pumping stations, trunk sewers, wastewater treatment plants (WWTPs) and outfalls or outlets that discharge treated wastewater back to the environment. Most sewers flow under gravity, with these sewers designed so that there is sufficient slope to stop build-up that may lead to blockages. There are generally three levels of wastewater treatment: Primary treatment. This treatment is designed to remove a substantial amount of suspended

matter, but little or no colloidal or dissolved matter.

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Secondary treatment. This treatment typically involves a biological treatment process that is designed to remove 85% of the Biochemical Oxygen Demand (BOD) and suspended solids. Some nutrients may incidentally be removed, and ammonia may be converted to nitrate.

Tertiary treatment. This treatment removes a high percentage of suspended solids and nutrients such as phosphorus and nitrogen. Tertiary treatment may additionally target other contaminants of concern, e.g. toxicants and salt for discharges into sensitive waterways or reuse applications where high quality recycled water is required.318

WA’s wastewater infrastructure can be categorised into: Water Corporation wastewater schemes Other wastewater supply schemes.

Water Corporation wastewater systems The Water Corporation supplies wastewater services to residential and industrial customers in most cities and towns across the State. Table 6.1 provides statistics on the Water Corporation’s wastewater activities and assets. Table 6.1: Water Corporation’s wastewater activities and assets319

2004/2005 2005/2006 2006/2007 2007/2008 2008/2009

Average volume of wastewater treated daily (ML)

371 386 385 405 405

Number of properties served 765,903 793,697 829,225 859,628 884,155

Number of properties connected 685,074 710,885 737,195 763,677 789,903

Length of sewers (km) 13,417 13,865 14,261 14,684 15,002

As described in the Potable Water section, the Water Corporation divides the State into regions and Table 6.2 provides statistics for each region. Table 6.2: Wastewater statistics for regions320

Region Properties Served

Properties Connected

Total Length of Sewers (kilometres)

Number of Pumping Stations

Number of Treatment Plants

Average Quantity of Wastewater Treated Daily (ML)

Perth 695,704 640,171 10,886 674 9 334.9

Agricultural 8,701 7,126 245 21 15 3.0

Goldfields 7,227 6,049 148 18 4 2.9

Great Southern 22,284 18,222 567 57 17 8.2

Mid-West 24,071 16,554 565 65 20 7.0

North-West 29,483 26,682 491 57 15 13.3

South-West 96,685 75,099 2,100 230 25 35.9

Total 884,155 789,903 15,002 1,122 105 405.3

Perth has the most number of wastewater assets for any region. Its wastewater assets are identified in Figure 6.1.

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Figure 6.1: Existing and possible future wastewater infrastructure in the Perth region321

There are three major metropolitan WWTPs in Perth – Beenyup, Subiaco and Woodman Point. In 2008/09, some 95% of Perth’s sewage was treated to a tertiary level, which contrasts with the average regional town where only 39% of sewage was treated to a tertiary level.322 The first three WWTPs discharge treated wastewater via deep water (10m-20 m) ocean outlets to the sea at Ocean Reef, Swanbourne and the Sepia Depression. The Department of Environment and Conservation sets the discharge licence conditions on the outlets, which include the requirement to: Measure treated wastewater flows and associated contaminant loads to ensure that maximum

nutrient loads are not exceeded Undertake an annual summer survey of ocean and beach water quality (nutrients, primary

productivity and bacteria indicators) in the vicinity of the ocean outlets.323

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To ensure that the impact of the discharge of Perth’s wastewater is not adversely affecting the marine environment, a monitoring program commenced in 1995 called the Perth Long Term Ocean Outlet Monitoring (PLOOM) Program.324 A large part of the Water Corporation’s capital budget is spent on wastewater infrastructure. In 2008/09, the expenditure was $480.3 million.325 Expenditure is being driven by urban growth, increased flow from existing services, infill sewerage work and increasing environmental requirements. Recently completed or nearly completed new WWTPs include: Alkimos WWTP, to be operational by December 2010. The project involves building a 5.2km

extension of the Quinns Main Sewer and a 3.7km ocean outlet. The plant will have an initial capacity of 20ML/day and can be upgraded to 160ML/day.

Narngulu WWTP commenced operating in 2008. The plant near Geraldton is WA’s first high performance aerated lagoon system, and is a prototype for future plants in larger country towns.

The second Broome WWTP, construction started in 2009. Halls Head WWTP – upgrade to 5.8ML/day, completed in 2009/10. Mandurah WWTP – Gordon Rd upgrade, completed in 2009/10. Hopetoun WWTP, commissioned in 2009. Woodman Point WWTP upgrade, completed in 2009. This project involved installing new odour

control facilities designed to achieve a 50% reduction and expanding capacity to 160ML. Beenyup WWTP upgrade, completed in 2009. This project involved expanding capacity from

120ML to 135ML as well as reducing its odour and improving its efficiency. Bunbury WWTP upgrade, completed in 2009. This project involved doubling the capacity of the

plant. Dongara WWTP, completed in 2009. The possibility of irrigating the Dongara Golf Course with

recycled water is being explored.326 There have been a number of long-term wastewater system upgrades such as the 10-year, $5.7 million Esperance program to build a new pump station and 4km of new pipeline. Over the last five years, more than $100 million has been spent through the Wastewater Overflow Risk Management Program on upgrading assets near Perth’s waterways to reduce sewage overflows. Work has included enhancing emergency management provisions at wastewater pumping stations, pumps and pressure mains, replacing or relining wastewater sewers and preventing root blockages in wastewater reticulation sewers.327 Another major investment program has been the Infill Sewerage Program. In some areas of Perth and in some regional towns, land was developed without reticulated sewerage infrastructure. These areas use septic tanks, which pose health and environmental risks if not properly maintained. In 1994, the WA Government and the Water Corporation commenced a program to replace septic tanks by building sewer mains and connecting properties to them.328 Known as the Infill Sewerage Program, the program connected 88,000 properties including 63,000 in Perth and 25,000 in regional centres by late 2009.329 The program is expected to cost $800 million and result in 100,000 connections.330 In mid-2009, the Infill Sewerage Program was deferred as part of the Water Corporation’s program to reduce its capital projects by $560 million over four years as requested by the WA Government in response to the global financial crisis. However, on 10 November 2009, the Minister for Water, Dr Graham Jacobs announced that all Spearwood Infill Sewerage projects will be completed. The deferment saved $85 million331 and affects the City Beach, Quinns and Rockingham areas in metropolitan Perth, and Boyup Brook, Bridgetown, Bunbury, Dawesville, Mandurah, Harvey, Ravenswood, Waroona, Geraldton and Greenough in regional towns.332 The 2010/11 State Budget announced that $25 million would be spent per annum on this program.333 Infill in Dawesville and Port Hedland was announced in 2010.334

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Future significant capital projects are listed in Table 6.3. Table 6.3: Future capital projects of Water Corporation335

Project Title Estimated total cost (million)

Principle delivery method

Tender to market

(Indicative)

Midland – Flora St emergency storage tank

$26.8M TBA H1 2012

Beenyup WWTP: Energy Recovery $21.9 Construct Only H1 2012

Subiaco WWTP: Upgrade to 67ML per day $28.0 Alliance H2 2012

East Rockingham WWTP: 40ML per day $239.5 Public Private Partnership

2014

Beenyup WWTP: Major Aeration Upgrade $23.0 Design and Construct

2014

Woodman Pt WWTP: Upgrade $57.3 Alliance 2014

Mandurah WWTP: Gordon Rd upgrade to 16ML/day

$48.2 TBA 2015

Other wastewater supply schemes There is only one large sewerage scheme in WA that it not managed by the Water Corporation. It is in the town of Kalgoorlie-Boulder and is provided by the City of Kalgoorlie-Boulder. It services about 14,000 connected properties and manages $26.7 million in sewerage and effluent infrastructure.336 There are 20 small sewerage service providers licensed by the Economic Regulation Authority to provide wastewater services. These consist of Hamersley Iron, which provides services in Tom Price, Paraburdoo and Dampier; the Rottnest Island Authority, which operates water and electricity services on Rottnest Island;337 and 18 local governments, which provide wastewater services in their local government area. These are listed in Table 6.4. Table 6.4: Local governments providing wastewater services338

Shire of Brookton Shire of Goomalling Shire of Ravensthorpe

Shire of Coolgardie Shire of Jerramungup Shire of Victoria Plains

Shire of Dalwallinu Shire of Kent Shire of Wickepin

Shire of Dowerin Shire of Koorda Shire of Yilgarn-Southern Cross

Shire of Dumbleyung Shire of Lake Grace Shire of Yilgarn-Marvel Loch

Shire of East Pilbara Shire of Moora

Shire of Gnowangerup Shire of Morawa

Table 6.5 provides details of the small sewerage schemes. The longest length of sewer mains in the small schemes is that of Hamersley Iron, which has 85km, and the smallest, is the Shire of Gnowangerup, which has 2.4km.339 Table 6.5: Summary of data for small sewerage suppliers340

Data 2006/07 2007/08 2008/09

Total length of sewer mains (km) 210 210 251

Total no. of sewerage connections 6,811 6,847 6,812

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6.2.2 Recycled water system description Treated wastewater is increasingly being seen as a valuable resource, and in many parts of the State, it is beneficially reused in a recycled water system. Recycled water infrastructure generally consists of: Wastewater treatment plants or recycled water treatment plants Reservoirs Pumping stations Recycled water trunk mains Chlorination systems, to disinfect the treated effluent Dual reticulation mains (sometimes known as third pipe or purple pipe mains) that distribute the

water to premises for garden watering, toilet flushing, laundry and industrial purposes. In 2008/09, the total volume of water recycled was 18,263ML, of which 7,635ML was produced in Perth.341 Table 6.6 shows that the percentage of recycled water in Perth is far lower than the average of the regional towns. Five towns (Manjimup, Albany, Australind/Eaton, Katanning and Merredin) recycled all of their effluent and three towns (Collie, Jurien and Kununurra) did not recycle any effluent.342 Table 6.6: Recycled Water (% of Effluent Recycled)343

Data 2006/07 2007/08 2008/09 Percentage Change

Average of all townsk 49.5 44.5 49.5 11.2

Perth 6.0 6.4l 6.2 -3.1

Average of regional townsm 51.7 46.4 51.7 11.4

There are 60 water recycling schemes across the State. Recycled water is used for a variety of purposes with the most common being:344 Irrigation of public open space. Examples include watering McGillivray Oval in Perth (operating

since 2003); parks and the trotting track in Northam; Broome Golf Course and Oval; Busselton Golf Course; Derby wetlands and golf course; Kellerberrin Oval; Wickham parks and gardens; and Wyalkatchem Bowls Club. In regional WA, about 40% of treated wastewater is recycled for the irrigation of public open space.345

Industrial uses. Examples include wastewater treatment processes, processed water from Kwinana Water Reclamation Plant (6GL/year of recycled water is produced)346 and dust control in Pinjarra.

Tree irrigation. Examples include plantations in Albany, Donnybrook, Dunsborough, Manjimup, Margaret River, Kemerton and Walpole.

Horticulture irrigation. Water is used irrigate food crops such as the Omrah Vineyard at Mount Barker.347

The proportion of recycled water used by each sectors is illustrated in Figure 6.2.

k No data was provided for Bunbury for 2006/07. Data for Newman is not available on this indicator. l In 2007/08, data on this indicator from the Water Corporation was rounded to the nearest whole percentage, so a value of 6% was reported in the 2007/08 Performance Report. m No data was provided for Bunbury for 2006/07. Data for Newman is not available.

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Figure 6.2: Total recycled water used (2008/09)348

Although recycled water is not currently used for drinking water in WA, the WA Government has stated that it will consider its use via indirect potable reuse. This involves mixing the recycled water in a natural system before being treated and introduced into the potable water system. The Water Corporation started a two-year research trial in 2010 exploring the viability of injecting recycled water into part of the Gnangara Mound and drawing it out at another location. The trial utilises water from the Beenyup WWTP, treating it to drinking water quality standards in the Beenyup Pilot Plant, and injecting about 1.5GL/year into the aquifer at a depth of between 120 and 220 metres. The water will then be extracted at some distance from the point of recharge and tested to determine if there are any changes to the water in the aquifer.349 If technically feasible, the groundwater replenishment technique has the potential to provide 35GL/year of potable water, and over the longer term, up to 115GL/year, thus supplying up to 25% of Perth’s potable water supply.350 The trial will also be used to inform Perth’s population about indirect potable reuse, and build support for it through the setting up of an educational facility at the site.

6.2.3 Policy and governance The WA Government strategy for sewerage is defined in the Government Sewerage Policy Perth Metropolitan Region (1995).351 The WA Government’s objectives for sewerage are expressed through a number of policy, legislative and operational documents, with the overriding ones being to reduce environmental damage from wastewater and to utilise wastewater as a resource. The regulatory regime for sewerage service providers is provided through the Water Services Licensing Act 1995 and administered by the Economic Regulation Authority. The Health Act 1911 regulates those wastewater activities relating to public health, and the Environmental Protection Act 1986 regulates issues relating to the prevention, control and abatement of pollution and environmental harm. DEC is preparing exemption of treated reclaimed water use from standard prescribed premise licensing to encourage use of the potential water source. A series of guidelines produced under the National Water Quality Management Strategy provides the authoritative national reference for sewerage systems and effluent management for WA’s approach. The Minister for Water is the price regulator for wastewater services. The current wastewater pricing approach is based on a proportion of the property value, rather than the cost of providing the service. In the 2009 Economic Regulation Authority inquiry into water service tariffs, it was recommended that this method be replaced by a fixed charge. There is no Government decision at the moment regarding moving off valuation-based charges. The Code of practice for the reuse of greywater in Western Australia governs grey water reuse at the residential or commercial lot level only. Greywater is wastewater generated from domestic

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Agricultural Environmental On-site Other Total

ML

Commercial, Municipal

and Industrial

Recycled water supplied

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activities such as laundry, dishwashing and bathing, and can be recycled on-site. It is distinct from sewage, also known as blackwater. It specifies minimum design and installation standards, and procedures for greywater reuse systems to protect public health and the quality of surface water and groundwater sources. In 2008, the WA Government released the State Water Recycling Strategy. This guides how recycled water can be safely incorporated across the range of water-use sectors. The State Water Plan 2007 set a target to recycle 30% of wastewater by 2030. The Water Corporation 50-year plan, Water Forever: Towards Climate Resilience, stated that the target was 60% by 2060.352 Water Forever identified the following actions to increase water recycling: Expanding the existing Kwinana Water Recycling Plant output by a further 3.6GL a year Working with land planning and development agencies to ensure that the Neerabup and East

Rockingham Industrial Estates are reticulated to support the use of recycled water Working with local governments to irrigate more public parks and ovals with recycled water Establishing water quality and quantity parameters for returning recycled water to the

environment.353 The WA Government is focusing its recycled wastewater efforts on large projects rather than at the household or urban development level. This does not mean that households do not play a role but the WA Government’s approach recognises that savings made through household recycling systems are relatively small. For the approach to work, large-scale users of the recycled water will be required, and these are most likely to be heavy industry and industrial areas.

6.3 Performance Sewerage system performance measures relate to: Frequency of mains sewer blockages, typically caused by fats and tree roots, and can lead to

sewage spills, particularly during heavy rains Frequency of sewage spills, which occur when the sewerage system cannot contain the

sewage flow, with the result that overflows or spills occur Response to service failures, notably sewer spills and chokes354 Compliance with discharge licences.

Another performance measure is the achievement of Operating Licence conditions as stipulated by the ERA. The number of sewer main breaks and chokes has been decreasing yearly in WA, as seen in Table 6.7. Perth continued to have less breaks and chokes than regional areas. There is considerable variation between regional towns with Kalgoorlie-Boulder having the highest number of sewer main breaks and chokes at 160.8 per 100km of sewer main and Jurien having the lowest at 3.4.355 The Water Corporation’s target is to have fewer than 40 blockages per 100km of sewer and it has consistently achieved this.356 Table 6.7: Sewer main breaks and chokes per 100km of sewer main357

Data 2006/07 2007/08 2008/09 Percentage Change

Average of all towns 25.5 29.2 26.3 -9.9

Perth 22.5 20.9 19.4 -7.2

Average of regional towns 25.6 29.6 26.6 -10.1

From a national perspective, the Water Corporation has excellent performance in main breaks and chokes, as seen in Figure 6.3.

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Figure 6.3: Sewer main breaks and chokes per 100km of sewer main358

There are different mechanisms for overflows in dry and wet weather. In dry weather, overflows are caused by chokes and blockages stopping flow. In wet weather, overflows are caused by water entering the wastewater system via cracks in pipes or illegal stormwater connections to sewers, causing the capacity of the wastewater system to be exceeded. Heavy rain events normally increase the number of overflows. In 2008/09, Perth experienced 0.2 sewer overflows per 100km of main that were reported to the environmental regulator and regional towns averaged 1.0 per 100km.359 The Water Corporation has a low number of sewer overflows compared to other systems nationwide, as seen in Figure 6.4. Figure 6.4: Sewer overflows to the environment per 100km of sewer main360

The Water Corporation has given attention to reducing overflows into Perth’s waterways through the Wastewater Overflow Risk Management Program. Table 6.8 shows that its targets have not yet been reached. Table 6.8: Overflows into Perth’s waterways361

2005 2006 2007 2008 2009 Actual

2009 Target

Overflows to Swan-Canning – conveyance system (No.)

6 5 6 4 2 0

Overflows to Swan-Canning – pump stations only (No.)

0 0 0 1 4 0

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From an asset management perspective, preventive maintenance for breaks and blockages is difficult, as it requires CCTV inspections or other expensive methods. Priority is given to areas where blockage rates have been high or where critical sewers exist. Another indicator of wastewater system performance is conformance with sewage effluent quality licence conditions, notably the Biochemical Oxygen Demand (BOD) and suspended solids conditions. The Water Corporation has achieved 100% compliance with its Operating Licences over the last five years.362 In 2008/09, the number of compliant sewerage treatment plants in regional towns increased to 24, compared to 22 in 2007/08.363 An alternative measure is the volume of sewage treated that is compliant with environmental standards. Table 6.9 shows that 100% of Perth’s wastewater was compliant for the last three years, and compliance is increasing in regional towns. A significant improvement has occurred in Kalgoorlie-Boulder where the percentage of compliant sewage rose from 12.5% in 2006/07 to 40% in 2008/09.364 Table 6.9: Percent of sewage treated volume that was compliant with environmental standards365

Data 2006/07 2007/08 2008/09

Average percentage of all towns (%) 91.6 94.5 96.3

Perth percentage (%) 100.00 100.00 100.0

Average percentage of regional towns (%) 91.2 94.3 96.2

Biosolids is the largely inert organic solid material that remains after anaerobic digestion of wastewater sludge. It is increasingly being seen as a valuable resource as it has important soil remediation and nutrient values. Biosolid reuse is very high for Water Corporation plants, as seen in Table 6.10. Table 6.10: The Water Corporation’s biosolid reuse366

2005 2006 2007 2008 2009 Actual

2009 Target

Biosolids reuse (Perth metro) (%) 96.4 99.9 100 95.9 100 100

The number of complaints about sewerage services provides an indicator of service quality and reliability. Complaints are recorded concerning sewer blockages and spills, trade waste services, sewerage system reliability, sewage odours and all other sewerage issues. The Economic Regulation Authority’s measures exclude government pricing policy, tariff structures or other non-applicable areas of the business. As seen in Table 6.11, the level of complaints between Perth and regional towns is fairly similar. All systems have experienced declining levels of complaints. The area with the most number of service complaints was Kalgoorlie-Boulder with 28.6 complaints per 1,000 properties.367 Table 6.11: Number of sewerage service complaints (per 1,000 properties) (%)368

2006/07 2007/08 2008/09 Percentage Change

Average of all towns 8.8 7.9 7.4 -6.3

Perth 8.7 6.8 6.2 -8.8

Average of regional towns 8.8 8.0 7.5 -6.3

The performance of small sewerage systems varies considerable. In 2008/09, the highest frequency of sewer breaks and chokes was recorded by the Shire of Dalwallinu, with 306 per 100km of sewer main. The highest number of overflows was Rottnest Island Authority, which recorded 66 overflows per 100km.369

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At regular intervals, wastewater service providers have to produce an Asset Management System Review and Operational Audit to identify if they have met their Operating Licence conditions as stipulated by the ERA. The studies all found that the wastewater service providers had an acceptable level of compliance with their Operating License requirements, and all were improving their Asset Management Plans.370

6.4 Future challenges The challenges to achieving improvements in wastewater and recycled water infrastructure are: Raising the standards of sewerage infrastructure in regional towns Phasing out property-based charging for wastewater Maintaining capacity in wastewater systems to keep pace with growth in number of services Developing financially feasible water recycling schemes due to the high costs of reticulation

and treatment under conservative regulations Keeping up with increasingly stringent environmental standards.

6.5 Report Card rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Wastewater B B- C+ C-

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s wastewater and recycled water infrastructure has been rated B. This rating recognises there has been an improvement in wastewater infrastructure in terms of environmental outcomes and operational performance across the State. However, the delay to complete the infill sewerage program and the slow increase in water recycling in Perth are notable deficiencies. Positives that have contributed to the rating are: Reduced overflows to Perth’s waterways Continued compliance with regulatory standards Effective asset management of the wastewater systems Significant investment in upgrades of wastewater systems in line with demand Focusing on large-scale recycled water schemes rather than relying on household level

schemes to increase recycled water use Upgrades to wastewater treatment plants resulting in both decreased discharges to the

environment and increased reuse of water Amount of recycled water in regional areas is high by national standards, and recycling in Perth

is slowly increasing Increasing investment in odour management systems.

Negatives that have contributed to the rating are: Sewerage infill program not complete The average country local government sewerage assets condition is lower than metropolitan

ones Current regulation of recycled water is conservative and inhibits new schemes.

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7 Stormwater

7.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Stormwater C C+ C- D

This rating recognises that there has been an improvement in policy and guidance documentation on stormwater infrastructure, but little practical developments. There is a lack of information on stormwater assets constraining effective understanding of the scale of the issue, which prevents prioritisation of work. There has been insufficient attention given to improving stormwater quality, although some local governments have invested in better managing discharge into environmentally-sensitive areas. The drying climate may have masked hydraulic capacity and asset quality problems of stormwater infrastructure. Since the last Report Card, the major stormwater sector developments in WA have been: Development of drainage and water management plans for priority urban growth areas

between Yanchep and Pinjarra Incorporation of Water Sensitive Urban Design concepts into the integrated land and water

planning framework, Better Urban Water Management Release of the Stormwater Management Manual for Western Australia Publication of the Report for potential use of stormwater in the Perth region: Quantity and

storage assessment Cottesloe Peninsula Groundwater Restoration Project.

Challenges to improving stormwater infrastructure in WA include: Improving the quality of information on stormwater infrastructure Need to develop a Swan Coastal Plain urban stormwater plan Improving drainage services as urban development expands into rural areas Accelerating the implementation of Water Sensitive Urban Design principles Addressing climate change risks Increasing stormwater use Working cooperatively where stormwater catchment areas span multiple local government

areas.

7.2 Infrastructure overview This section focuses on urban stormwater infrastructure as it relates to runoff from local areas via gutters, pipes, open drains and overland flows. It does not consider infrastructure relating to mainstream flooding, caused by the passage of floodwaters down a catchment, or to coastal flooding. It does not consider rural drains. Rural drains are those designed to prevent flooding and water logging of agricultural areas. The Water Corporation is responsible for some 124km of rural main drains in the Great Southern region and 1,762km in the South-West.371 These cover six Drainage Districts constituted under the Land Drainage Act 1925372 and involves 320,000ha in Mundijong, Waroona, Harvey, Roelands, Busselton and Albany.

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7.2.1 System description Stormwater is rainfall that runs off urban areas, typically roofs, roads and impervious manmade surfaces. Stormwater infrastructure comprises: Engineered pipes, culverts, channels and retarding basins Natural creeks, waterways and wetlands Stormwater water quality management and re-use infrastructure.

The engineered stormwater system is made up of: Minor drainage systems, consisting of kerbs and gutters, side entry pits and underground

pipes. Except in unusual circumstances, they are designed to convey runoff for rainfalls up to the five-year Average Recurrence Interval (ARI). That is, runoff from a rainfall event that only occurs once in every five years on average.

Major drainage paths, including include arterial (trunk) drains, natural river and creek systems, roadways, and other open areas. They are intended to carry a rare flood, typically up to a 100-year ARI.

Concrete-based stormwater assets have long lives, typically between 20 and 80 years, as seen in Table 7.1. Table 7.1: Stormwater asset and design life373

Asset Design life

Stormwater pipes Lined channels Stormwater sumps Manholes Dams Weir structures Gross pollutant traps Retarding basins

50–80 years 50–80 years 20–50 years 20–50 years 50–80 years 50–80 years 20–50 years

50–100 years

Stormwater infrastructure contributes to a number of quite different objectives including: Runoff control. The infrastructure should carry away rainfall from a site so that it does not

cause erosion or other environmental damage, and not cause flooding elsewhere. Flood control. The infrastructure should carry away large volumes of water following the

overflow of the minor drainage system, preventing local flooding. Water quality. The infrastructure should remove pollutants that enter the stormwater system.

Pollutants originate from many different sources and range from fuel and oil from roads, to litter dropped on streets and sediment from building sites.

Water reuse. The infrastructure could provide a source of water suitable for non-potable uses. Urban amenity. The infrastructure could provide a source of water for urban ponds, lakes and

parks. Waterway health. Runoff in unmodified catchments is normally released over a longer period of

time and has lower peak discharges than in modified catchments, resulting in healthier water environments in unmodified catchments. The infrastructure should deliver water to waterways that mimic natural conditions in terms of quantity and quality. Particularly important is slowing the flow of water through the stormwater system. This results in the quantities of suspended solids and nutrients being reduced as these settle out or are absorbed, and erosion damage is reduced. In less modified catchments, the run-off water is released over a longer period of time and has lower peak discharges, thus maintaining healthier water environments.

Managing stormwater has evolved considerably over the last few decades. In the past, the focus of stormwater systems was on minimising local flooding risk, and consequently, systems were designed to remove stormwater as quickly as possible. This resulted in large open drains that are

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costly to build and maintain, are a safety hazard, and cause damaging effects to the receiving waters. Today, the focus is on stormwater systems that both minimise the stormwater impacts on aquatic ecosystems and utilise stormwater as a water resource. This has been achieved by incorporating stormwater into the integrated catchment planning. Integrated catchment planning brings together urban design, open space and development control, and aims to solve existing flood problems and stop future flooding problems, as well as improving the environment and amenity. By placing conditions on developments, such as allowing for future expansion of the drainage network, preventing development in flood prone areas, and requiring the retention of runoff on site, the impacts of runoff and hence flooding can be reduced. Core to this are implementing Water Sensitive Urban Design (WSUD) principles in project design. WSUD involves techniques to treat, store, and infiltrate stormwater runoff onsite rather than simply facilitating rapid discharge of stormwater to the environment. WSUD measures include rainwater tanks, green roofs, infiltration systems, permeable pavements, urban water harvesting, swales and constructed wetlands. The Department of Water has facilitated the uptake of WSUD practices. These include ensuring that WSUD principles were incorporated into the integrated land and water planning framework Better Urban Water Management (2008), by providing WSUD training, by developing WSUD demonstration sites, and by providing information on the performance and cost of WSUD approaches specific to Perth and the State. Local governments in the metropolitan area have also encouraged WSUD, for instance, the City of Mandurah has adopted the Water Sensitive Urban Design Local Planning Policy.374 Local governments’ stormwater improvement activities are usually detailed in their stormwater/drainage management plans. For example, the City of Mandurah has adopted a stormwater management plan that focuses on the retrofitting of traditional stormwater systems to best management practices through the decommissioning of sumps, installation of gross pollutant traps, and the implementation of WSUD.375 Another example is the City of South Perth’s development of its Integrated Stormwater Drainage Catchment Management Plan, which involves analysing all of the stormwater catchments and prescribing appropriate treatments.376 The WALGA estimates that engineered stormwater assets owned by local governments have a net present value of $1.08 billion.377 Within the Perth area, stormwater infrastructure is principally the responsibility of the Water Corporation and local governments. The Water Corporation has 830km of arterial drains and local governments some 3,000km.378 The arterial drains all discharge to waterways. The local government drains discharge into the Water Corporation’s drains, into waterways directly or into drainage basins. Drainage basins store stormwater runoff and in sandy soil, allow stormwater to recharge shallow groundwater aquifers. The use of drainage basins can remove the need for an expensive, comprehensive drainage scheme and outfall to the rivers. The recently completed four-year Cottesloe Peninsula Groundwater Restoration Project is an example of using road drainage water to recharge a groundwater aquifer. The $2.35 million project involved removing 10 stormwater ocean outfalls and installing seven underground stormwater treatment, storage and recharge areas. The water from these and 400 roadside soak pits replenish the aquifer. Another benefit of the project has been to reduce the carriage of pollutants into the sea water, notably litter, hydrocarbon and heavy metal contaminates, by the closure of the ten road drainage pipelines in the sea.379 The annual discharge of stormwater drains in the Perth area is about 120GL of which, 81.4GL flows from the Swan-Canning main drains, 20.6GL from the Peel drains and 18GL from the coastal

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(Carine, Herdsman and Subiaco) drains.380 Due to the volume of this water, the Department of Water recently commissioned a study to determine if there was potential in harvesting the stormwater. The 2008 report found that harvesting was possible and the approach used would vary with season and location. It recommended that: Winter and spring seasonal base flows in the main drains should be targeted for removal via

pumping and injection into aquifers. Pumps can be placed in small off-drain basins or within the drains to extract water, which can then be transported a sufficient distance to recharge the superficial aquifer.

Below or above ground storage basins should be utilised to capture and retain stormwater events. Storage of this water is recommended throughout the winter and spring, but can then utilise the same groundwater pumps to inject into the groundwater during the summer and autumn when the main drains baseflow is lower.381

In regional areas, stormwater harvesting is being pursued for several reasons including as a source of low cost water, to supplement limited other water sources, and to obtain a source of non-saline water. Examples of stormwater harvesting projects being examined or built are at Pingelly, Wongan Hills, Perenjori, Morawa and Moora.382

7.2.2 Policy and governance The State Government approach to stormwater derives from the guidance in the State Water Plan 2007. This states that water planning should inform and integrate with land-use planning, and that the implementation of integrated land and water planning is based on the principles of total water cycle management. It also states that it is intended that water planning should precede land-use planning. Total water cycle management ‘recognises that water supply, stormwater and sewage services are interrelated components of catchment systems and therefore must be dealt with using a holistic water management approach that reflects the principles of ecological sustainability’.383 To implement this approach, a variety of policies, strategies and plans at different land-use scales have been developed by the WA Government. These inform and guide local government and developers’ plans. The planning framework integrating drainage planning with land planning processes is illustrated in Figure 7.1. Two key inputs to the planning process are the regional water plans (described at the front of this chapter) and the drainage and water management plans (DWMPs). DWMPs are developed by the Department of Water and cover all aspects of total water cycle management including: Protection of significant environmental assets within the plan area Water demands, supply options, opportunities for conservation and demand management

measures and wastewater management Surface runoff, including peak event (flood) management and the application of Water

Sensitive Urban Design principles to frequent events Groundwater, including the impact of urbanisation, variation in climate, installation of drainage

to reduce groundwater levels, potential impacts on the environment and the potential to use groundwater as a resource

Water quality management, which includes source control of pollution inputs by catchment management, acid sulphate soil management, control of contaminated discharges from industrial areas, and management of nutrient exports from surface runoff and groundwater through structural measures.384

DWMPs are being developed for urban growth areas between Yanchep and Pinjarra and those produced to date are: Southern River Integrated Land and Water Management Plan Forrestdale Main Drain Arterial Drainage Strategy Byford Townsite Drainage and Water Management Plan

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Swan Urban Growth Corridor Drainage and Water Management Plan Jandakot Drainage and Water Management Plan.

Figure 7.1: Planning framework integrating drainage planning with land planning processes385

The WA Government has produced a number of policies and guides that contribute to stormwater management and these are described in Table 7.2. Table 7.2: Key policies and guides that contribute to stormwater management

Publication Description

Stormwater Management Manual for Western Australia (2004-2007)

The manual sets out stormwater management objectives, principles and frameworks to ensure the best management of stormwater. It supports and provides information to enable implementation of the Western Australian Planning Commission planning policies and Environmental Protection Authority environmental policies. It also provides specific Western Australian guidance in keeping with the national guides.

Decision process for stormwater management in WA (2009)

This document provides a decision framework for the planning and design of stormwater management systems. The decision process sits within the approach outlined in the Stormwater Management Manual for Western Australia.

Better Urban Water Management (2008)

This document identifies a framework for the implementation of integrated land and water planning. It describes how water resources, including stormwater, should be considered at each land-use planning stage and identifies actions, investigations and agencies responsible for provision of particular water resource information. Water resource information derived at each planning stage is used to inform the subsequent planning stage.

Planning Bulletin 92 (2008)

This document prepared by the WA Planning Commission provides guidance on urban water management matters to be considered in new urban developments.

The main organisations involved in stormwater management, policy and regulation, and their stormwater responsibilities are: Department of Water (WA Government). The Department has responsibility for drainage

governance and planning reform in relation to urban, coastal, and inland drainage. In 2007, it commenced the Urban Drainage Initiative (Towards a water sensitive city) to assist the WA Government in reforming drainage and waterways management. The initiative has facilitated improved regional water planning, stormwater management, provision of land and water planning advice and governance structures.

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Economic Regulation Authority (WA Government). The Authority licenses drainage service providers under the Water Services Licensing Act 1995. There are only two licensed drainage service providers – the Water Corporation and the Rottnest Island Authority.

Local governments. Local governments are solely responsible for urban drainage in all regional towns. In Perth, they are responsible for the drainage system, excluding the large arterial drains managed by the Water Corporation.

Water Corporation. The Water Corporation is responsible for Perth’s large arterial drains. Main Roads WA. Main Roads WA is responsible for some drainage assets around major

roads, and these may or may not be connected to the Water Corporation or local authority networks. These drains are normally where the risks of contamination from traffic or spills are high.

Mining companies. Mining companies may provide drainage services for remote mine sites and related communities.

Private land owners. The stormwater infrastructure on private land is the responsibility of the land owners.

Private developers. Developers are responsible for constructing the stormwater network within their developments.

Metropolitan drainage charges have recently increased, and there are two reasons for this. Firstly, drainage service costs were previously paid largely by non-residential properties and this inequitable approach has changed. Secondly, the cost of providing drainage services has increased because the cost of draining roads and public open space is now being shared across all properties in the drainage catchments.386

7.2.3 Sector trends Slower than expected uptake of WSUD Despite the promotion of WSUD, there has been very slow uptake of the principles into developments in WA. This situation is common across Australia. The National Urban Water Governance Program identified that there were many reasons for the slow uptake of WSUD projects with the key impediments being problems with: Policy, regulations and approvals Finance and costs Awareness and training Social demand and consumer affordability The incentives and disincentives Risk management and assessment (including public health) Political and senior management support Peer cooperation, such as sharing ideas and information.387

7.3 Performance Performance measures for stormwater systems relate to their: Ability to convey minor storm events and safely convey major storm events or

eliminate/minimise flooding and consequential damage to private property or critical infrastructure

Ability to maintain the long-term sustainability of natural systems from a water quality perspective, by minimising the discharge of pollutants and generally improving the quality of stormwater discharge

Structural health, including integrity, age and maintenance quality. Assessing the performance of the stormwater system is difficult for three reasons. Firstly, it cannot be evaluated in isolation as it is affected by land use and building development policies that control building in flood prone areas and the uptake of WSUD. Secondly, there is no consolidated data on

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stormwater assets and performance, such as the quality of stormwater runoff entering our natural waterways. Thirdly, there is little publically available data on individual stormwater networks. The lack of data arises partly from the regulatory arrangements. While drainage licences issued by the Economic Regulation Authority specify service and performance standards, licensees are not required to, and do not, report on these in their annual licence performance report.388 In addition, although local governments are major drainage service providers, they are exempt from the licensing arrangements. This exemption removes the necessity for determining service and performance standards, and means that stormwater is not a focus in the same way that roads and other high profile assets are. The only publically available data on the performance of drainage assets is that contained in the Water Corporation’s annual report. It states that for the last five years, its urban and rural drainage systems have operated in accordance with guidelines one hundred percent of the time.389 Expenditure on local government drains is impossible to ascertain, as most local governments report a combined figure for roads, paths and drainage. Consequently, the evaluation of drainage services is mostly subjective. The following observations can be made: There is no information to suggest that there are significant problems from a hydraulic capacity

perspective with stormwater infrastructure. Despite the increase in impervious areas due to urban infill, the instances of existing stormwater systems not being able to cope with the flow are very small. This experience may be affected by the decline in rainfall due to the drying climate.

Much of the stormwater system has limited ability for stormwater pollution control devices to be installed at a low cost.

Data on stormwater assets has not improved in the last five years. The lack of major storm events in southern WA has resulted in a lack of attention given to the

importance of drainage assets to provide flood protection. There has been limited improvement in the quality of stormwater flowing into the Swan-

Canning River system, Peel Harvey estuaries and metropolitan beaches. A Department of Water report in 2007 into stormwater contamination at Perth’s beaches found that stormwater and associated sediments are contaminated with microbes and heavy metals. Nutrients, petroleum hydrocarbons, organic chemical compounds and suspended solids were also present, but to a lesser extent. Stormwater was only one factor in the generation of these pollutants, and other contributors are the wastewater outfalls and nearby port operations. The study was the first baseline study of the water quality around the 65 drains in the Swan Region. The contamination can exceed recreational and environmental guidelines many times over.390 Given that significant changes have not been made to stormwater drainage in this region, it is unlikely to have changed significantly.

7.4 Future challenges The challenges to achieving improvements in stormwater infrastructure are: Improving the quality of information on stormwater infrastructure. There is very little asset

and performance information on stormwater assets. Given that they are worth billions of dollars and provide an essential community function, data needs to be produced as the first stage towards improving their asset management. It is recognised that the data will improve with the roll-out of the ROMAN II asset management software by local governments, as there is the opportunity to include stormwater information in it. In addition, data may improve as a result of the introduction of new water legislation.

Need to develop a Swan Coastal Plain urban stormwater plan. Currently there is no adequate framework to guide the management of urban stormwater on the Swan Coastal Plain. This results in large volumes of water flowing into the Swan-Canning River system, Peel Harvey estuaries and metropolitan beaches rather than using it for aquifer recharge or other

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purposes. The framework would also require reform of governance arrangements as responsibility for stormwater quality is currently unclear and spread over several bodies. For example, stormwater that drains to the Swan River originates in local government drains, and then is conveyed via Water Corporation main drains to the point of discharge. Management of stormwater quality can be at the source, in transit (such as in compensation basins wetlands) or at the end of the pipe. Discharge can be to the ocean (e.g. Floreat drain), rivers (e.g. the drain discharging into the Swan River) or the recharge of ground water. There is a need to resolve responsibility for stormwater quality management both to reduce the environmental impact on the receiving waters and to utilise the stormwater resource. The Department of Water is currently developing an Arterial Drainage Scheme and investigating the stormwater management arrangements in the Swan-Canning Catchment. The WALGA recommends that a comprehensive stormwater management plan for this region receives $30 million over five years.391

Improving drainage services as urban development expands into rural areas. Rural areas serviced by rural drains are not designed to achieve urban drainage outcomes. Consequently, rural drains may need to be upgraded or replaced with ones that are more appropriate when urban developments expand into rural areas. This is not an issue in large urban redevelopments where drainage plans are developed, but can be for areas, which incrementally expand into areas where there are existing rural drains.

Accelerating the implementation of Water Sensitive Urban Design principles. Reducing stormwater runoff is one of the benefits of Water Sensitive Urban Design (WSUD). The use of WSUD needs to be accelerated.

Addressing climate change risks. Climate change science indicates that there will be more extreme rainfall events, resulting in more frequent and more severe instances of overland flooding, particularly due to both the heavier rainfall and the large amount of blockage-causing debris that builds up due to less frequent flushings. Managing this risk involves identifying future rainfall patterns, locating areas that are vulnerable to overland flooding, and changing the design specifications of stormwater systems to accommodate the changed rainfall pattern.

Increasing stormwater use. Stormwater is a major new water source. Water businesses and developers have implemented projects to capitalise on it. However, the projects can be expensive and are only viable in certain circumstances, making their widespread use uneconomic and impractical.

Working cooperatively where stormwater catchment areas span multiple local government areas. Stormwater management in catchments spanning several local government areas requires cooperation. It can be difficult to achieve a consensus as each solution imposes different costs and benefits on each group.

7.5 Report Card rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Stormwater C C+ C- D

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s stormwater infrastructure has been rated C. This rating recognises that there has been an improvement in policy and guidance documentation on stormwater infrastructure, but little practical developments. There is a lack of information on stormwater assets constraining effective understanding of the scale of the issue, which prevents prioritisation of work. There has been insufficient attention given to improving stormwater quality, although some local governments have invested in better management of discharge into environmentally-sensitive areas. The drying climate may have masked hydraulic capacity and asset quality problems of stormwater infrastructure.

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Positives that have contributed to the rating are: The introduction of WSUD principles into land-use and water management policy and practice Development of drainage and water management plans Development of documents supporting stormwater management.

Negatives that have contributed to the rating are: Lack of asset and performance information on stormwater assets Insufficient collection of stormwater quality and quality data Slow uptake of stormwater quality improvement devices, such as gross pollutant traps, litter

baskets and sediment traps Ongoing stormwater pollution along Perth’s beaches Divided responsibility and unclear accountability for stormwater water quality and stormwater

reuse The majority of outfalls into the Swan/Canning River do not meet water quality targets for the

maintenance of ecosystem health.

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8 Irrigation

8.1 Summary

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Irrigation C+ C+ C- D-

This rating recognises that there have been improvements in irrigation infrastructure in several irrigation areas resulting in improved efficiency and reduced water loss. The asset management regime for each irrigation schemes is developing. The expansion of the Ord River Irrigation Area is incorporating higher standards of water management. There is a need for continuing investment in water efficiency both on-farm and in distribution networks. Since the last Report Card, the major irrigation sector developments have been: Implementation of a project to increase the size of irrigated land in the Ord River Irrigation Area

by 8,000ha, which is about a 50% increase on its current area Piping of an additional 85 km of irrigation channel in the Harvey Irrigation area.

Recently completed and in-progress major infrastructure projects include: Ord Irrigation Expansion Project A range of irrigation scheme efficiency projects The State-wide metering program Harvey Pipe Project Gascoyne Irrigation Pipeline Project.

8.2 Infrastructure overview This review discusses the infrastructure of surface water based irrigation schemes. It does not discuss individual (self-supplied) irrigation infrastructure based on the use of groundwater in WA.

8.2.1 System description WA surface water irrigation infrastructure systems comprise: Water storages and weirs Constructed open channels Natural streams Pipelines, pumps, water meters On-farm irrigation systems.

Together, these systems store, distribute and drain irrigation water. For the purposes of this section, irrigation covers application of water to cultivated land or open space for the growth of vegetation or crops. It does not include garden and park irrigation, as this type of use is addressed under the Stormwater or Wastewater sections. WA has four surface water irrigation schemes. The schemes are: the Ord River Irrigation Area the South West Irrigation Area the Carnarvon Irrigation Area Preston Valley Irrigation Area.

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The Ord Irrigation Area was commenced in the 1960s and 1970s. The initial development was the construction of the Kununurra Diversion Dam (completed in 1963) and the diversion of water onto farms on the Ivanhoe Plain to the east of the Ord River. The main storage (the Ord River Dam) was constructed between 1969 and 1972 and is located approximately 55km upstream in the Carr Boyd ranges. The Ord River Dam created Australia’s largest artificial lake, Lake Argyle. The Lake has a storage capacity of 10,760 million cubic metres (kL) to the full supply level. However, its flood storage (to the first emergency spillway levels) is over twice that size.392 The Kununurra Diversion Dam captures water released from Lake Argyle, and raises the water level in the main watercourse so that water can be supplied by gravity to nearby irrigated farms via irrigation channels. The initial project, which involved the construction of the major water supply and drainage infrastructure, is referred to as Stage 1 of the Ord Irrigation Area. It created 14,000ha of irrigated farm land. This land grows a diverse range of crops including chickpeas, sorghum seed, melons, pumpkins, mangoes, bananas, citrus, irrigated pasture, and tropical forests.393 Some 90% of Indian sandalwood grown in Australia is produced here.394 Only 20ha of sugarcane is now grown in the district. The area of serviced irrigation blocks is currently being increased by construction of the Ord Irrigation Expansion Project (OIEP). This is the first phase of developing the M2 Supply area, one of a number of Stage 2 areas for development. It will increase the size of the Ord Irrigation Area by 8,000ha, increasing the total serviced area to about 22,000ha. The new area is located on the Weaber Plains to the north-east of the existing Stage 1 areas. Further investigations are continuing on other Stage 2 areas (4,000ha in Mantinea, 1,300ha in the Ord West Bank and 1380ha in Packsaddle). The first major construction contracts for Stage 2 were signed in March 2010 and they include building 19km of irrigation channels, a 13km road extension and irrigation control structures.395 The Ord Irrigation Expansion Project will cost $195 million and take four years to complete. The Australian Government is investing a further $215 million in supporting social and related infrastructure in the East Kimberley region. The first agricultural land release will be in Weaber Plains and is planned for 2011. The additional irrigation allocation for the new OIEP area is expected to be between 80GL/yr and 120GL/yr depending on the crops intended to be grown in the area. The current irrigation entitlements for Stage 1 areas is 350GL/yr.396 Further phases of development of the M2 Supply Area involve a further 8,000ha in WA and an additional 14,000ha around the Keep River region in the Northern Territory. No timeline has been set for these later phases. The South West Irrigation Area covers an area of 112,000ha in three irrigation districts: Waroona, Harvey and Collie. It is serviced by the South West Irrigation Asset Cooperative, which owns the assets and South West Irrigation Management Cooperative (trading as Harvey Water), the irrigation water provider. About 10,000ha of land is under permanent irrigation for dairy farming, beef grazing and horticulture, with the total irrigable area available being 30,000ha.397 Unlike most other Australian irrigation areas, the irrigation area is not along a river system. Instead, it obtains its water by gravity flow from seven dams via channels. The area’s major infrastructure projects consist of: The Harvey Pipe Project. This three-year project was completed in 2009 and cost $74.5million.

It involved replacing open irrigation channels with gravity-fed (high density polyethylene) irrigation pipes. The result has been a 30% annual water saving, which equates to 17.1GL.398

Building the $7.5 million 18km Benger Pipeline from Sandalwood Road to Harvey Dam. The pipeline makes it possible to transfer water between the Collie and Harvey River catchments, and has improved the supply of irrigation water in the Shire of Harvey.399

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In 2009, Harvey Water submitted to the WA Government the Collie River Irrigation System Modernisation Plan. The plan proposes replacing the current open channel irrigation water delivery system in the Collie River Irrigation District with a fully piped, irrigation water delivery system, partially driven by gravity pressure. It would require installing 250km of piping connecting to 445 irrigation supply points. It would cost $165 million and take three to five years to complete. It is estimated that 22GL of delivery losses will be saved.400 In June 2009, the WA Government announced that it would fund the construction of a diversion and desalination project in the Upper Collie River Basin designed to reduce the salinity of water in the Wellington Dam to 740mg/l TDS by 2015. The diverting saline water will be taken from the Collie East River and, after treatment, pumped into a water disposal pipeline that carries the water to the ocean. A trial diversion had been done in the past, transferring 6GL of early winter saline river flows over 2005, 2006 and 2007401 into coal mining voids. The Gascoyne horticultural industry is predominantly based on the banks of the Gascoyne River. There are some 1100 hectares intensively cropped using water that is privately abstracted or delivered through the irrigation water scheme supply. Plantations vary in size from 6 ha to 130 ha, made up of a mix of share farming, owner managers, and lease arrangements. The industry labour force draws heavily on backpacker labour at various times of the year The Carnarvon Irrigation Area is serviced by Gascoyne Water, which comprises two private irrigator cooperatives. Gascoyne Water Asset Mutual Cooperative owns and manages the infrastructure assets and Gascoyne Water Cooperative manages the irrigation business. Gascoyne Water supplies local growers with irrigation water and they produce tomatoes, table grapes, mangoes, bananas, capsicums, chillies, peppers, beans, zucchinis, eggplants, melons and other small crops, with an annual production of about $81 million.402 Irrigators derive water from private bores, and a public water supply area currently distributed by the Gascoyne Water Cooperative.403 In 2009, Government and irrigation cooperative funds were committed to the $19.9 million Gascoyne Irrigation Pipeline Project. This project involves replacing and upgrading the pipeline that provides irrigation across the entire 1,200ha Carnarvon horticulture precinct. The upgrade will also allow the servicing of a proposed 400ha expansion to the irrigation area. The project will reduce system losses by as much as 30% and reduce the incidence of rising water tables or saline water run-off.404 The project has the potential to raise the value of the output in the area by up to $68 million from the current average production of $81million.405 This expansion will contribute towards the WA Government’s Gascoyne Foodbowl Initiative. The Preston Valley Irrigation Scheme is serviced by the Preston Valley Irrigation Cooperative. It obtains its water from the Water Corporation’s Glen Mervyn Dam and supplies water to customers along the Preston River near Donnybrook. Irrigation uses consist of mixed horticulture and apple orchards. In 2008/09, the total volume of irrigation water supplied to supply network in 2008/09 was 219GL, with the Ord Irrigation Scheme accounting for 66% of this, as seen in Table 8.1. For the Ord, water consumption has decreased, as sugar cane is no longer grown. Table 8.1: Volume of irrigation water supplied (ML)406

2006/07 2007/08 2008/09

Gascoyne Water 5,299 4,605 5,557

Ord Irrigation 181,792 135,777 144,649

Preston Valley 991 765 929

Harvey Water 66,321 62,086 68,122

Total 247,092 203,233 219,257

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In 2008/09, Harvey Water accounted for 72.0% of the total irrigation connections, as seen in Table 8.2. Table 8.2: Number of irrigation connections407

2006/07 2007/08 2008/09

Gascoyne Water 175 179 187

Ord Irrigation 273 273 268

Preston Valley 68 68 86

Harvey Water 1,697 1,252 1,392

Total 2,213 1,772 1,933

Table 8.3 shows the carrier length for the largest schemes. 100% of Ord Irrigation’s carriers are unlined, while pipes accounted for 61% of Harvey Water’s overall carrier length. Table 8.3: Carrier length (gravity irrigation) in 2008/09 (km)408

Unlined Channel

Lined Channel

Pipe Drainage – Unlined Channel

Total Carrier

Ord Irrigation 124.0 0.0 0.0 169.8 293.8

Harvey Water 172.0 83.0 430.0 0.0 685.0

Total 296.0 83.0 430.0 169.8 978.8

Table 8.4 shows the volume of water supplied by the Water Corporation to irrigation schemes. In 2008/09, 133,292GL was supplied in the Ord Irrigation Area, 99,943GL to the South-West Irrigation District, 5,964 to the mid-west irrigation district (Gascoyne) and 906GL to the South West (Preston Valley) scheme.409 Table 8.4: Water Corporation’s bulk water supply for irrigation410

2004/05 2005/06 2006/07 2007/08 2008/09

Volume of Water Delivered (ML) 319,029 357,277 373,696 352,440 240,105

The reduction in water supplied is dominated by reductions in the Ord Irrigation Area. This is a combination of improved distribution efficiencies and the change from sugarcane as a major crop in the area. Deregulation of the dairy industry has also affected demand in the south-west irrigation areas.

8.2.2 Policy and governance The institutional arrangements for managing irrigation were recognised as inadequate in the 2005 Irrigation Review. It made 59 recommendations, and these contributed to the WA Government’s 2007 water reforms. Another major impetus for reforming irrigation was the WA Government’s agreement to the National Water Initiative (NWI). This led directly to policies and legislation being developed that seek to align WA’s irrigation objectives with those of the NWI. A significant change has been the pricing of irrigation water. The Water Corporation is the supplier of bulk water to all of the schemes. The Water Corporation charges a bulk water charge based on a renewals annuity charge, plus ongoing operation and maintenance costs. When each of the irrigation schemes was privatised over the last decade with the assets shifting from government ownership to cooperative ownership, operating subsidies were identified and a glide path established to reduce these to the point where growers paid the real cost of provision. The Ord cooperative will cease receiving operating subsidies in 2012/13, and the Carnarvon Irrigation Cooperative in 2018/19. The South West Irrigation Management Co-operative and Preston Valley

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Irrigation Co-operative have fully phased in charges to growers and no longer receive operating subsidies.

8.2.3 Sector trends Changing inflows as a result of climate change Climate change is expected to have a significant impact on the availability of surface water and, to a lesser extent, groundwater. Climate change is likely to lead to increased average temperatures, resulting in increased evaporation and transpiration rates, and to more variable rainfall patterns including droughts. Development of irrigation in northern Australia Currently, there is very limited irrigation in northern Australia but given that it has large rainfall, it has long been considered that it has significant potential for irrigation. To examine the region’s irrigation potential, the Australian Government commissioned a five-year project called the Northern Australia Water Futures Assessment (NAWFA). It examined 13 regions of northern Australia that had high rainfall including three in WA. The WA regions are shown in Figure 8.1.

Figure 8.1: The regions examined in the Northern Australia Water Futures Assessment study411

The 2009 NAWFA final report concluded that large-scale irrigation was not viable because: The climate is extremely seasonal and may be described as annually water-limited Northern Australia has little or no rain for three to six months every year, and potential

evapotranspiration rates are very high Northern Australia experiences high rainfall during the wet season but most rain falls near the

coast and year-to-year amounts can be highly variable Potential inland dam sites would receive limited amounts of water and suffer very high

evaporation rates The few river reaches that flow year-round have high cultural, social and ecological value and

are generally sustained by localised groundwater discharge Groundwater may offer potential for increased extractions, but shallow aquifers rapidly fill

during the wet season and drain through the dry season, and provide little opportunity for increased groundwater storage

In the near future, potential evapotranspiration is likely to increase, while rainfall is likely to be similar to historical levels, which were generally drier than the last decade, especially in the west.412

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Some have challenged the NAWFA’s conclusion arguing that by using small-scale irrigation, such as irrigation mosaics (discrete patches of irrigated land dispersed across the landscape), irrigation can occur in northern Australia. The advantage of irrigation mosaics is that they result in reduced surface and deep drainage, erosion and nutrient loss relative to large-scale irrigated areas.413 If irrigation activities do prove viable in northern Australia, not only would irrigation infrastructure be required, but so would major improvements to transport infrastructure so that the irrigation produce could be shipped out of the region.

8.3 Performance Performance is judged as the level of service provided compared to the agreed or designed standard of service, based on measures such as: Delivery system efficiency. The delivery system efficiency declines as the amount of water lost

increases. Water loss can occur through evaporation of water lost to the atmosphere; seepage of the movement of water through the beds of irrigation channels; leakage of water through channel banks and structures; operational losses due to theft, outfalls, system fill, unmetered diversions and inaccurate metering;414 and outdated irrigation delivery systems.

Availability of assets to hold, supply and distribute water. Response to reported leaks.

Table 8.5 shows that in 2008/09, about 19% of the total supply network intake volume for large suppliers was not accounted for in the volumes supplied to customers. This was an improvement over 2007/08. This change reflects improvements in the delivery efficiency of the supply networks, principally through reducing evaporation and leakages. The table shows a significant improvement in supply network efficiency by the Ord Irrigation Cooperative between 2007/8 and 2008/9. This was due to continued investment in automation of the controls systems on their open channel networks. The inefficiencies in the Harvey Water are mainly due to the unpiped Collie Scheme. Table 8.5: Unaccounted-for irrigation water415

2007/08 Total supply

network intake volume

(ML)

2007/08 Unaccounted

Irrigation Water (ML)

2007/08 Supply

Network Delivery

Efficiency (%)

2008/09 Total supply

network intake

volume (ML)

2008/09 Unaccounted

Irrigation Water (ML)

2008/09 Supply

Network Delivery

Efficiency (%)

Ord Irrigation 213,907 78,130 63 178,740 34,091 81

Harvey Water

84,745 22,659 73 87,977 17,895 80

Total 298,652 100,789 66 266,717 51,986 81

The reviews of irrigation cooperatives undertaken on behalf of the Economic Regulatory Authority have found that asset management was generally appropriate. The specific review findings were: The 2009 Asset Management Review of the Ord Irrigation Cooperative Ltd found that its asset

management system was appropriate to the sale and value of the assets under management. It updated its asset management plan in 2008.416

The 2007 Operational Audit and Asset Management System Review of Gascoyne Water Co-operative found that it had a high standard of asset management, and that the systems and procedures in place were appropriate to the scale and value of the assets under management.417

The 2007 Review of the Preston Valley Irrigation Co-Operative found that its irrigation asset management plan and processes were appropriate and adequate given the scale and nature of its operations. However, it identified improvement opportunities that relate to the asset register details and a more formalised review process for the asset management plan.418

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The 2010 audit of the South West Irrigation Management Co-operative (trading as Harvey Water) found that it had an effective asset management system, although there were a number of minor areas where improvements were identified.419

Environmental sustainability Environmental challenges facing irrigation in most areas involve the degree of water extraction and salinity. Extractions need to ensure that they do not over stress water-dependent ecosystems. This stress increases during dry conditions when environmental flows decrease significantly. This problem is likely to be exacerbated with the onset of climate change. Some irrigation areas are already experiencing rising salinity, which can be due to catchment land clearing as experienced around the Collie River and Preston River. Engineering solutions, such as the diversion pipeline and desalination plant, are options being pursued to address these problems and another is tree and perennial plantings.420

8.4 Future challenges The challenge in achieving improvements in irrigation infrastructure is developing sustainable irrigation. Water Resource Plans are likely to see a long-term reduction in consumptive water usage meaning that the volume of water available to irrigators will also decline. This means that water efficiency needs to increase, water needs to be used on the most valuable agriculture produce, and more opportunistic irrigation needs to occur.

8.5 Report Card rating

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Irrigation C+ C+ C- D-

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s irrigation infrastructure has been rated C+. This rating recognises that there have been improvements in irrigation infrastructure in several irrigation areas resulting in improved efficiency and reduced water loss. The asset management regime for each irrigation scheme is developing. The expansion of the Ord River Irrigation Area is incorporating higher standards of water management. There is a need for continuing investment in water efficiency both on-farm and in distribution networks. Positives that have contributed to the rating are: Investment in irrigation infrastructure that has improved efficiency and reduced water loss Expansion of the Ord River Irrigation Area.

Negatives that have contributed to the rating are: Large percentage of channels are open and unlined Ongoing problems of salinity in some irrigation areas.

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ENERGY

Energy policy The WA Government does not currently have a comprehensive energy policy, although it is developing one under the Energy 2030 – Strategic Energy Initiative (SEI). In 2011, the SEI aims to deliver : An energy vision for 2031 A set of clear goals to guide decisions made by policy makers and investors A range of flexible strategies to allow industry and the community to adapt to emerging

opportunities and challenges Policy and regulatory strategies to promote investment and competition in the energy value

chain and remove impediments to technological change.421 Currently, WA’s energy policy is made up of a range of historical decisions that have resulted in a fragmented and inconsistent approach to energy policy. These measures, which are discussed in the relevant energy sections, include: Setting electricity and gas tariffs below the cost of supply Constraining State-owned energy suppliers in their commercial operations Lack of full market contestability for energy customers Requiring 15% of gas reserves under development to be available for domestic use Commitment to increasing the amount of renewable energy supplied.

WA’s energy sector is governed by a combination of State and national organisations. The key ones are: Office of Energy (WA Government). The Office of Energy provides advice to the Government

on energy policies and strategies for Western Australia, and develops and administers subsidies, rebates and grants for the Western Australian community and the energy industry. It is also responsible for monitoring the performance of the Government-owned Electricity Corporations.

Economic Regulation Authority (WA Government). The Authority regulates the electricity, gas, water and rail freight industries in the State.

Independent Market Operator (IMO).The IMO is an independent organisation, funded by industry, whose role is to administer and operate the Wholesale Electricity Market (WEM) in the South West Interconnected System (SWIS). Its key responsibilities are to operate the WEM (which includes the financial transactions between all parties involved in generating, transporting and retailing electricity), to facilitate the provision of sufficient generation capacity and demand side management to meet expected load, and to administer the Market Rules (the set of rules that govern the market and the operation of the SWIS, including the wholesale sale and purchase of electricity, Reserve Capacity and Ancillary Services).422 A particular function of the IMO is to set the level of capacity required in the market two years in advance, and to certify the capability of all generation facilities annually.

Electricity Review Board (WA Government). The Western Australian Electricity Review Board performs certain appeals functions under the Electricity Industry Act 2004, reviews certain decisions under the Wholesale Electricity Market Rules, and makes determinations about market participants’ behaviour under those Rules.

Australian Energy Market Commission (AEMC) (Australian Government). Since 1 January 2010, the AEMC has been responsible for rule-making for gas pipeline access in WA.423

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Australian Competition Tribunal (ACT) (Australian Government). The ACT performs the functions of appeal for the WA gas market.

Retail Energy Market Company Limited (REMCo). REMCo is the retail market administrator for gas Retail Market Schemes. These schemes specify the process for customer transfers, as well as the balancing, allocation, and reconciliation of the gas market. A gas retailer must become a member of a Retail Market Scheme.424

Energy Ombudsman (WA Government). The Ombudsman receives, investigates and facilitates the resolution of complaints from residential and small business customers about their electricity/gas company.

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9 Electricity

9.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Electricity B- B- C+ B-

This rating recognises that the expansion of generation and transmission network in the South West Interconnected System has been adequate to meet the high growth in demand experienced with the expansion of population. However, problems exist including the need for reform of the Wholesale Electricity Market, the lack of transmission capacity in many urban and regional areas, reliability concerns in regional areas, and ageing transmission and distribution assets. The NWIS is sub-optimal for today’s electricity needs in the Pilbara region. The State’s isolated electricity systems are generally in good condition and many remote communities have received improved electricity supplies over the last few years due to the regularisation program. Since the last Report Card, the major electricity sector developments in WA have been: Reform of WA’s electricity sector including the disaggregation of Western Power Corporation

and establishment of the Wholesale Electricity Market (WEM) in the SWIS (Southwest Interconnected System)

A significant growth in electricity demand Major increases in electricity retail tariffs Increase in the average age of transmission and distribution infrastructure Increase in capacity constraints in SWIS Growth in the new generation in southern SWIS region resulting in augmentation of the

network Significant increase in new generator capacity in the SWIS and NWIS.

Recently completed and in-progress major infrastructure projects include: Commissioning major gas-powered generators including NewGen Kwinana combined cycle

gas turbine power plant and open cycle gas turbine plants (ERM Power’s Neerabup Power Station, Alinta Wagerup) and Western Energy’s Kwinana Power Station)425

Commissioning of the Bluewater coal-fired power plants and the ongoing construction of the Worsley Alumina multi-fuel cogeneration facility

Commissioning of the Emu Downs Wind Farm and the beginning of construction of the Collgar Wind farm

Undergrounding of transmission and distribution networks Regularisation of some regional and remote community power systems.

Challenges to improving electricity infrastructure include: Reform of the WEM Maintaining competition in the WEM Raising electricity prices to reflect cost levels Determining the future of the NWIS Pressure on fuel supplies Renewing ageing infrastructure Accommodating increased renewable (intermittent) generation in the SWIS Implementing significant demand management measures to constrain peak growth in demand Capturing the opportunities of smart network technology.

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9.2 Infrastructure overview

9.2.1 System description Electricity infrastructure refers to stationary electricity networks that comprise interconnected electricity transmission and distribution systems, together with connected generating systems, facilities and loads. It includes non-renewable and renewable generation. It excludes mobile generators and non-grid-connected electricity systems. The State’s physical electricity infrastructure comprises: Generation Transmission networks Distribution networks Retail companies.

Figure 9.1 illustrates the infrastructure components of an electricity network. Figure 9.1: Infrastructure components of the electricity network426

WA electricity sector disaggregation Between 1995 and 2006, electricity in the State was generated and distributed by the vertically integrated, Government-owned Western Power Corporation. On 1 April 2006, under the Electricity Corporation Act 2005, the Corporation was disaggregated into the four separate Government-owned electricity corporations of: Verve Energy, responsible for generation of electricity in the SWIS Western Power, responsible for electricity transmission and distribution in the SWIS Synergy, responsible for retailing electricity in the SWIS Horizon Power, responsible for generation, transmission/distribution and retailing of electricity

to regional and remote electricity customers.

Verve Energy Verve Energy is WA’s largest electricity producer and in 2008/09, generated 71% of the energy produced in the SWIS.427 Verve Energy owns and operates four major power stations in Kwinana, Cockburn, Pinjar and Muja. Another power station in Collie is owned by Verve Energy, but operated by a private company. The list of Verve Energy’s generating plants are detailed in Table 9.1

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Table 9.1: Verve Energy’s generation plant428

Generating plant Fuel Capacity (MW) Acquired/commissioned

Collie Coal 340 1999

Cockburn Gas 240 2003

Muja A and B Coal/heavy fuel oil 240 1965 Retired April 2007; returned to service July 2008/April 2009 following Varanus Island incident; currently undergoing major refurbishment

Muja C Coal/heavy fuel oil 400 1981

Muja D Coal/heavy fuel oil 454 1985-86

Kwinana A and C Coal/gas/fuel oil 640 1970-78

Kwinana B Gas/fuel oil 240 1970-73 Retired December 2008

Kwinana gas turbine Gas/distillate 21 1972

Mungarra gas turbines Gas 112 1990-91

Pinjar gas turbines Gas/distillate 582 1990-96

Worsley Gas 60 2000

Tiwest gas turbine Gas 38 1999

West Kalgoorlie gas turbine

Distillate 62 1984-90

Geraldton gas turbine Gas/distillate 21 1973

Albany wind farm – 12 turbines

Wind 22 2002

Bremer Bay – 1 turbine Wind 0.6 2004

Coral Bay – 3 turbines Wind 0.8 2007

Denham – 4 turbines Wind 1.0 1997, 1998, 2007

Esperance – 15 turbines Wind 5.8 1993 & 2002

Hopetoun – 2 turbines Wind 1.2 2004 & 2007

Kalbarri Wind Farm – 2 turbines

Wind 1.6 2008

Several of Verve Energy’s generating plants are reaching their end of life and due for retirement. Kwinana Power Station Stage C is forecast to close in 2015/16. Planned new generation plant includes: Two high efficiency gas turbines (HEGTs) being built at Kwinana Power Station Stage B, which

will be operating before the summer of 2011/12.429 Muja AB units. Verve Energy has entered into a Memorandum of Understanding with a joint

venture partner that has lead to the retrofitting of Muja AB Power Station units with pollution reduction equipment, operating as a mid-merit peaking plant with a 10 to 15 year lifespan.430

The majority of Verve’s electricity generation is contracted to Synergy in the SWIS, and electricity generated outside the SWIS in Horizon Power regulated areas is either sold to Horizon Power from an independent power producer, or is generated by a Horizon Power-owned power station. The 2006 disaggregation imposed a number of restrictions on Verve Energy designed to encourage greater private sector involvement in the electricity sector. Restrictions included preventing Verve Energy from retailing electricity until 2013 (extendable to 2016) and capping the amount of electricity that Verve Energy can generate to 3,000MW.n

n The Minister for Energy issued a Ministerial Direction on 9 July 2010 exempting the Muja AB power station from the 3,000MW cap.

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Since its formation, Verve Energy has been incurring significant losses. Between 2006 and 2009, Verve Energy lost $454 million and increased its gearing ratio from 60% to 80%.431 As a result, the WA Government commissioned a review (Oates Review) of Verve Energy, and this identified that the problems facing the organisation were mostly due to factors outside its control, notably: Low fixed electricity tariffs Increasing network charges Structure of the WEM, which penalises rather than rewards Verve Energy for the role it plays in

managing residual risk in the market Deficiencies in the vesting contract. The vesting contract stated that Verve Energy needs to

supply Synergy and that Synergy retains a certain margin on customer sales to fund its retail operation. The result is that while Synergy is protected from loss of income, Verve Energy increasingly suffers as electricity inputs rise and electricity tariffs are fixed below the cost of supply.432

Significant direct unplanned expenditure due to having to recommission the Muja AB generators in response to the Varanus Island gas outage (after having previously run this plant down, consistent with its retirement plan) and operating an expensive liquid burning plant.433

Western Power Western Power is responsible for maintaining and developing the electricity transmission and distribution in the SWIS. It operates some 88,000km of powerlines within the SWIS. Its income is mainly derived from electricity retailers paying Western Power a fee for transporting electricity through the network, and generators paying a fee to connect to the transmission system. The network charges are regulated under the network access arrangements that are reviewed by the Economic Regulation Authority every three years.434 Synergy Synergy is responsible for purchasing and retailing electricity to industrial, commercial and residential customers in the SWIS. It is the sole supplier to ‘small use (franchise) customers’ (those customers consuming less than 5.7Kw, or 50MWh per year). It mainly purchases its electricity from Verve Energy, but as its share of the market has declined, Synergy has purchased more electricity from other suppliers. The 2006 reforms restricted Synergy from generating electricity for seven years, extendable to 10 years upon review. Horizon Power Horizon Power is a vertically integrated electricity provider responsible for generation/procurement, transmission, distribution and retail of electricity to customers in regulated areas outside the SWIS. It supplies residential, industrial and commercial customers and resource developments. It delivers power to over 43,000 customer connection points, supplying more than 35,000 residential properties and 8,000 businesses. It generates only about 13% of the electricity it supplies from its own assets, with the remaining 87% being purchased from privately-owned generators and renewable energy from Verve Energy.435 Table 9.2 provides details on Horizon Power’s network assets.

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Table 9.2: Horizon Power’s Current Network Assets as at June 2009436

Asset Type Asset Unit

Transmission lines 458km

Overhead distribution lines High voltage three phase 2,149km

High voltage single phase 2,703km

Low voltage 658km

Low voltage streetlight circuits

395km

Underground distribution cable (km) High voltage 430km

Low voltage 657km

Low voltage streetlight circuits

122km

Total transformer capacity 566 MVA

WA electricity systems In WA, there are four distinct geographically-based electricity systems that have quite different physical, operational and regulatory structures. They are: South West Interconnected System (SWIS) North West Interconnected Systems (NWIS) Esperance System Isolated or islanded power systems.

South West Interconnected System The SWIS is the system of generation, transmission and distribution of assets supplying the area between Kalbarri in the north and Albany in the south and stretching out to Kalgoorlie in the east, as seen in Figure 9.2. The SWIS is not connected to the NWIS electricity grid to the north nor to the National Electricity Network, which covers the eastern Australian States and South Australia. The Wholesale Electricity Market (WEM) is unique to the SWIS and operates under different rules from the National Electricity Market. The WEM has been operating since 21 September 2006, and is operated by the Independent Market Operator (IMO). The WEM is split into: An energy market. The supply of electricity in the SWIS is primarily managed under bilateral

contracts (over 90% of electricity is supplied this way). The Short-Term Energy Market (STEM) is a day-ahead market that allows retailers and generators to trade around their bilateral positions. The real-time balancing market is operated by the System Manager (a ring-fenced entity within Western Power). System Management dispatches plant in real time to balance generation and demand.

A capacity market. Capacity is traded in the form of Capacity Credits, a notional unit of capacity provided by a generator or an organisation that can substantially reduce its electricity demand when required (demand management). Each year, the IMO allocates Capacity Credits and retailers are required to acquire sufficient Capacity Credits to meet their requirements under the WEM Rules.437 This reserve capacity mechanism is designed to ensure that there is adequate generation and demand side management capacity to maintain reliability and security of electricity supply.

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Figure 9.2: SWIS infrastructure438

The Market Rules state the objectives of the WEM as: To promote the economically-efficient, safe and reliable production and supply of electricity and

electricity-related services in the SWIS To encourage competition among generators and retailers in the SWIS, including by facilitating

efficient entry of new competitors To avoid discrimination in that market against particular energy options and technologies,

including sustainable energy options and technologies such as those that make use of renewable resources or that reduce overall greenhouse gas emissions

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To minimise the long-term cost of electricity supplied to customers from the SWIS To encourage the taking of measures to manage the amount of electricity used and when it is

used.439 SWIS generation The vast majority of electricity in the SWIS is supplied from coal or natural gas-powered generation plants. Baseload capacity is supplied by coal plant (Verve Energy’s Collie, Muja and Kwinana power stations, and Griffin Energy’s Bluewater power station)440 supported by some gas-fired plants (particularly cogeneration plants and combined cycle gas turbines). Peak-load is supplied mainly by gas, dual-fuelled gas-liquids and liquid plants.441 As well as coal and gas, other fuel sources include wind and distillate. A noticeable feature of SWIS generation is the large number of plants that can accommodate dual-fuels (i.e. coal and natural gas or natural gas and distillate). This capability was very important during the Varanus Island gas supply disruption in 2008, as the alternative fuel allowed for the continued operation of many plants, albeit at a much higher cost of output.442 In 2009, natural gas was the fuel source for about 50% of the electricity generated in the SWIS. The changes in the fuel mix for SWIS generation are shown in Figure 9.3. Generation plants built in the last few years include: NewGen Kwinana combined cycle gas turbine power plants Open cycle gas turbine (OCGT) plants (ERM Power’s Neerabup Power Station, Alinta

Wagerup and Western Energy’s plant at Kwinana) Coal plants – Bluewater power station (unit 1 and unit 2 by Griffin). The Emu Downs Wind Farm (joint venture between Griffin and Stanwell).

New plants under construction include Verve Energy’s Kwinana High Efficiency Gas Turbines, the Worsley Alumina multi-fuel cogeneration facility and the Collgar Wind farm near Merredin.443 Figure 9.3: Percentage of Capacity Credits by Fuel Type*444

* DSM stands for demand side management

SWIS transmission and distribution The SWIS transmission and distribution network is divided into the bulk transmission network and 13 geographically-based sub-transmission and distribution load areas.445 The sub-transmission network operates at 132 and 66 kV. The bulk network, consisting of power station switchyards, major terminal switchyards and interconnecting transmission lines, is a meshed network that can withstand a single unplanned outage without loss of load. The sub-transmission network, consisting of zone substations and the interconnecting transmission lines, is generally capable of withstanding a single unplanned outage without loss of load, but if there is more than one outage at the same

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time, there may not be enough network capacity to meet demand. The Perth metropolitan region and major regional centres are supplied by such a sub-transmission network. The Perth CBD, with its requirements for a high level of supply security, can experience two coincident transmission outages, but still receive continuous supply. Regional towns in WA’s south-west within the SWIS are supplied by radial networks operating at 220, 132 and 66 kV and generally have loads of less than 20MW. The radial lines are often not connected to other transmission/distribution networks or connected to generation. This means that if a fault in the radial transmission line occurs, supply to the connected loads will be lost.446 Consequently, regional towns and industry have less security of supply than urban areas. In 2008, Western Power proposed a $3.5 billion, four-year program to upgrade and expand its networks. However, due to the often speculative nature of the large block loads driving the need for increased transmission, coupled with the requirement for new projects to be subject to regulatory oversight, many of these projects remain uncertain. Key projects include: 330kV transmission line from Pinjar to Moonyoonooka (near Geraldton). This has since failed

to be approved by the economic regulator and has been replaced by a $320 million 330kV transmission upgrade from Neerabup to Eneabba (Stage 1 of the original project, referred to as the Mid West Energy Project – Southern Section). Stage 1 is scheduled to be put before the economic regulator for approval before the end of 2010. If successful, it should be complete in mid-2013.

$169 million 330kV transmission line from Collie to a new substation to be built in Perth’s eastern suburbs. This project has been shelved for the foreseeable future.

$180 million transmission line from Collie to Southdown (northeast of Albany) to service the Grange Resources mine. This project is on hold until the mining proponent is able to progress the development of its project (including securing financing)

$190.6 million on new transmission capacity, including new substations at Wangara, Joondalup, Warwick and Thornlie

$9.4 million for a new transmission line to the Boddington gold mine $256.4 million to expand the network’s distribution capacity, replace ageing infrastructure and

improve reliability and safety $21.3 million on the Rural Power Improvement Program, which is specifically targeted towards

reliability of supply in rural areas.447 This project, jointly funded by Office of Energy and Western Power, provided a substantial number of upgrades to improve reliability and supply in rural areas and ceased in 2010/11.

$97 million committed to ensure reliability of supply during the summer peak period.448 This program involves increasing network capacity so that it can continue to supply during peak demand.

Recently completed upgrades included: North Perth’s power supply upgrade. This involved upgrading the network to cope with growth

in demand and the construction of a new power station at Neerabup. The project was completed in 2009.449

Static Var Compensator (SVC) installation. With the increase in connections by new generators in the south-west of the network, there was increased chance of voltage overload and subsequent network failure. To eliminate this problem, Western Power installed an SVC, which maintains power stability, provides flexibility for transmission equipment outages and balances the increased flow of energy entering the network from new generators. The $35 million project was completed in 2009.450

40 Worst Feeder Program. This was a four-year maintenance program, completed in 2009, to reinforce the SWIS’s worst performing feeders.451

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Western Power’s ongoing programs are: Rural Power Improvement Program. This project started in 2004 and seeks to improve rural

supply in 35 rural areas by reducing the number of customers affected by individual faults, reducing the time needed to locate and isolate faults, and increasing the speed to restore power to affected customers. It has involved rebuilding overhead lines, reinforcing poles, building communication base stations and installing telemetry devices.452

Pole Replacement Program. Western Power has over 630,000 wooden poles and many of these are approaching their end of life. Unserviceable poles can lead to pole top fires and toppling. In 2008/09, Western Power inspected some 195,000 poles and replaced 9,409 wooden poles at a cost of $46.8 million.453

Upgrading of the Electricity Network Management and Control (ENMAC). The ENMAC system monitors and manages the distribution network from a central control centre in East Perth. Upgrading of this system is ongoing and the most recent enhancement was the installation in 2009 of a Distribution Power Analysis (DPA) function for a long rural feeder that supplies Denmark. This has allowed power to be managed effectively, significantly reducing the risk of power outages.454

State Underground Power Program. This program started in 1994 following severe storm damage to the overhead distribution system that left thousands of customers in the metropolitan area and the south-west region without power for several days. Its aims to have half of the Perth metropolitan area serviced by underground power by 2010. It has two components – major residential projects and the smaller localised projects.455 Around 51% of the Perth Metropolitan Area is now serviced by underground power.456

The recent and projected investment programs by Western Power are shown in Figure 9.4. Figure 9.4: Investment programs by Western Power457

* The Mid West Energy Project (Southern Stage) is subject to business case approval by government

North West Interconnected System The NWIS is a network comprising public and private transmission assets, servicing the Pilbara region including the towns of Karratha, Port Hedland, Paraburdoo. It is WA’s second largest transmission network with an installed capacity of 500MW and 1,200km of transmission lines.458 The major towns on the NWIS supplied by Horizon Power are Cossack, Port Hedland, South Hedland, Karratha, Roebourne, Wedgefield and Point Samson, while the private sector-owned transmission network supplies Cape Lambert, Dampier, Leinster, Pannawonica, Paraburdoo, Tom Price and Wickham. BHP Billiton has a separate transmission and distribution system in Newman

0

200

400

600

800

1000

1200

1400

2007/08 2008/09 2009/10 20010/11 2011/12 2012/13 2013/14

$ M

Mid West Energy Project (Southern Stage)*Operating ExpenditureCapital Expenditure

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(proximate to the NWIS). However, it is not connected to the Pilbara Iron/Horizon Power NWIS transmission assets. The NWIS is used by resource companies to supply the town sites associated with mining operations. Rio Tinto supplies electricity to Dampier, Tom Price, Paraburdoo, Wickham and Pannawonica, and BHP supplies Newman. State agreements are in place that grant these companies the powers and authorities of an Electricity Supply Authority under the Electricity Act 1945 (repealed). For example, the Iron Ore (Hamersley Range) Agreement Act 1963 allows Rio Tinto to act as the Supply Authority for Dampier, Tom Price and Paraburdoo. While theoretically the networks also need to meet the licensing requirements of the Electricity Industry Act 2004, licensing exemptions were provided to these companies operating under one of three government agreements (i.e. the Hamersley Range, Mount Newman and Robe River Agreements). Approximately 75% of the region’s installed generation capacity (1,600MW) is not connected to the NWIS.459 This reflects the fact that resource companies have tended to develop energy supply solutions to service the needs of individual projects, rather than adopting an integrated, coordinated grid-based regional energy development strategy. These isolated generation facilities are predominantly small-scale and diesel-fired. In the mid-1980s, the then government-owned electricity company, SECWA, provided some interconnection along the Pilbara Coast, linking the two major load centres in Karratha and Port Hedland. Today, the generation and transmission assets are owned by both the public and private sector and extend along the Pilbara coast (Horizon Power’s portion of the network) and inland through the West Pilbara region (Rio Tinto’s portion of the network). The main generators connected to the NWIS are: Hamersley Iron’s 120MW generator plant at Dampier (scheduled for decommissioning by the

end of 2010) Robe River’s 105MW plant at Cape Lambert (scheduled for decommissioning in 2011) Rio Tinto’s newly commissioned Seven Mile Power station Pilbara Iron’s Paraburdoo generator plant Alinta’s 210MW plant at Port Hedland and 126MW facility at Mt. Newman ATCO Power’s 86MW plant in Karratha460 Alinta also has an additional power station located in Newman.

Under the Pilbara Generation 2013 project, Horizon Power is planning a new generation facility to meet projected organic growth in the towns of Port Hedland and Karratha.461 Additional generation will be required to meet rapid additional residential development in these townships or to support new mining and industrial loads. The NWIS transmission lines are owned by Pilbara Iron and Horizon Power.462 Horizon Power oversees the operation of its portion of the NWIS via a control room in Karratha. Rio Tinto has separate control room facilities. The NWIS has not evolved into a fully interconnected network because large distances generally exist between loads. Transmission lines are generally expensive to install across long distances. Maintenance and operation costs in the Pilbara also tend to be high due to frequent cyclonic activity in the region and high ambient temperatures.463 The co-location of loads with mining operations, and little non-project-specific load elsewhere, has traditionally rendered it more efficient to build isolated diesel generators near mining operations.

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However, as the number and scale of loads throughout the region increases on account of rapid development in the mining industry, the case to develop a fully integrated network grows and the relative cost of developing and operating a transmission solution drops significantly. Interconnection is an increasingly viable way of meeting energy growth in demand, providing electricity more economically and supplying power to more load centres with greater reliability. Demand for power in the Pilbara region is increasing significantly. Over the next nine years, demand is forecast to double to a total demand of 3,200MW. The total energy demand in the Pilbara is expected to reach 10,500GWh per annum by 2015.464 Providing the lowest cost power supply is becoming increasingly important as electricity prices rise, principally due to gas price increases. Having multiple generators with different cost characteristics supplying into an open access and common-user network would allow for the optimum cost generation to be selected at any time. There is unlikely to be a sophisticated market into which electricity can be ‘bid’ in the WEM, as the WEM is far too small to warrant this. However, competitive bilateral electricity contracts between private sector providers are possible and would provide more efficient competitive solutions. The key is access to the transmission network to transport electricity from the generator to the load centre. An interconnected meshed network would also provide a more reliable level of supply, as more generators and alternative transmission paths would be available for load centres. Greater efficiencies can also be achieved through the installation of large-scale, efficient and interconnected gas-fired plant, as opposed to small-scale diesel-fired isolated units. As the number of load centres increases with the development of new mining projects, an interconnected network would facilitate the development of more efficient and lower cost generation. A 2008 report commissioned by Horizon Power and the WA Department of Industry and Resources on the future of the NWIS recommended that the most cost effective way to address the energy supply challenges in the growing Pilbara region is to invest in an integrated transmission network and create an effective governance framework.465 This would require that the existing technical deficiencies be rectified in order to relieve the current transfer and stability constraints, and the reliability and stability of the overall system would need to be increased with proper interconnection between parts of the system.466 Specific changes could include: Establishing a single system operator to replace the current informal, voluntary approach to

system operation and ancillary service provision Introducing measures to promote greater coordination by the market in planning investment in

networks (electricity and gas) and generation Instituting a clear framework for transmission access, charging and cost recovery to facilitate

new investment in generation and transmission Developing a centralised market mechanism.467

The Pilbara Underground Power Project is nearing completion. This $130 million project will deliver underground power to South Hedland, Roebourne, Karratha and Onslow.468 Esperance System The Esperance System consists of more than 3,000km of distribution power lines and accounts for 86% of Horizon Power’s distribution network.469 The network has experienced a high number of disruptions470 over the last few years, due to both the asset quality and planned interruptions because of the ongoing Esperance Network Rural Upgrade Project (ENRUP). This $12 million, four-year project started in 2006 and finished in 2010. It focused on asset renewal to reduce fire risk. The project has involved reducing the distance between poles to prevent sagging powerlines and clashing conductors that can lead to bush fires, and replacing unserviceable poles. Other improvements to the network are also occurring as part of Horizon Power’s normal operational

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activities, such as upgrades to the single phase network and undergrounding of parts of the distribution network.471 Isolated or islanded power systems Outside the areas served by networked electricity supplies are areas that obtain their electricity from isolated or islanded power supply. These include: A small regional interconnected network between the towns of Kununurra and

Wyndham in the Kimberley. Horizon Power owns the 33kV high voltage distribution line running between the two towns and Pacific Hydro owns the transmission line that runs to the Argyle Diamond Mine.472 473

Towns supplied by Horizon Power. Horizon Power owns and operates the power supply to 28 towns and communities across WA as of August 2010. Some of these are large communities, such as Broome and others are very small communities such as Warmun. In some, Horizon Power owns the generation and in others, a third party supplier provides wholesale electricity under a Power Purchase Agreement. Communities with a Power Purchase Agreement include the Aboriginal communities of Bidyadanga, Ardyaloon, Beagle Bay, Djarindjin/Lombadina and Warmun, which are supplied by Energy Generation Pty Ltd (enGEn), and the larger communities of Broome, Derby, Looma, Fitzroy Crossing and Halls Creek are supplied by Energy Development Limited (EDL).474 The number of towns supplied by Horizon Power is increasing under the Town Reserves Regularisation Project designed to regularise communities. These are indigenous communities and other remote communities that, until recently, provided their own electricity. Their supply has recently been taken over by Horizon Power. The regularisation of power supply typically involved upgrading the electricity distribution infrastructure and installing new power generation facilities. The upgrade also involves installing card-operated pre-payment meters in individual houses to ensure greater ability in managing electricity demand, thereby improving the financial outcomes of the community. Becoming customers of Horizon Power has resulted in customers paying the State-wide Uniform Tariff and having the ability to access a range of WA Government concessions and rebates that were not previously available to them.475 The regularisation of power has been delivered under the Aboriginal and Remote Communities Power Supply Project (ARCPSP) funded by the WA Government through the Office of Energy and the Australian Government’s Department of Families, Housing, Community Services and Indigenous Affairs.

Large permanent communities that generate their own electricity. These are communities that have a population greater than 200 and self-supply with the assets owned by the local community. Over time, these communities are expected to become regularised.

Figure 9.5 shows the location of Horizon Power’s current supply areas.

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Figure 9.5: Horizon Power’s current supply areas and communities proposed for regularisation476

Electricity tariffs WA has four unique features to its electricity tariffs. Firstly, electricity tariffs are applied equally across customer classes in the SWIS and throughout the rest of the State. This is despite significantly different energy production costs in the metropolitan and regional areas. This arrangement is called the Uniform Tariff Policy. The difference between the higher cost of generation and supply in regional areas and the tariff revenues received by Horizon Power is subsidised through the Tariff Equalisation Fund (TEF). This fund is paid for by electricity customers in the SWIS through an additional charge added to the network component of their tariff. This cross subsidy, justified on an equity and regional development policy basis, amounted to $72 million in 2008/09.477 In 2009, the WA Government increased the TEF allocated amount to $175.7 million for 2010/11 and $181.2 million for 2011/12.478 The cross subsidy approach does not conform to best-practice regulation. Secondly, WA is the only State that still offers regulated tariffs for certain classes of large customers (although this may be at the retailer’s discretion, depending on the size and nature of the large customer in question). For example, Horizon Power provides fully cost-reflective and

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commercially-priced electricity (which is not TEF reliant or cross-subsidised) to large industrial and mining loads on the NWIS. Thirdly, customers consuming less than 50MWh per annum are not contestable, meaning that only Synergy in SWIS and Horizon Power outside SWIS can provide electricity to these customers. Fourthly, tariffs have not increased significantly for over a decade, but are now rapidly increasing. Between 1997/98 and 2008, retail electricity prices in WA have not increased, meaning that their real price after taking into account inflation has reduced by 30%. Small business tariffs did not increase between 1991/92 and 2008, while large business tariffs did not increase in nominal terms between 1991/92 and July 2007.479 One result of this has been that WA had the lowest cost of electricity supply in the nation for most of the 2000s, as seen in Figure 9.6. However, as the cost of generating and supplying electricity has increased over that time, the price charged for electricity has been increasingly below the cost of provision. Figure 9.6: Electricity prices across Australia480

The underpricing of electricity is recognised as unsustainable and in 2009 the Office of Energy recommended substantial increases in electricity tariffs, such as advising that the residential tariff (A1/A2) should increase by 52% in 2009/10, 26% in 2010/11 and 13% in 2011/12.481 While the WA Government has released State Budget Assumptions based on all tariffs reaching cost-reflective levels by 1 July 2011,482 it has only announced modest price rises, which will not achieve this. That is, it announced price increases of 10% to households in April 2009, followed by 15% in July 2009. In March 2010, the Government approved a further two increases of 7.5% and 10% to take effect in April and July 2010. At the time of writing, the WA Government has not announced further increases but the WA Government’s 2010/11 Budget Paper 3 identified an assumed increased for the A1/A2 tariff of 22.3% in 2011/12, 5.6% in 2012/13 and 6.0% in 2013/14.483

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9.2.2 Policy and governance For over a decade, WA Governments have pursued two long-term electricity objectives. Firstly, electricity must be provided in a safe, reliable and environmentally-responsible fashion. Secondly, it must be provided at the lowest price commensurate with satisfactory quality and reliability to encourage investment and growth in the economy and provide WA industry with a competitive advantage in global markets. It has pursued a range of initiatives to achieve this including the reform of the State’s electricity industry (2006), Fuel Diversity Policy (2008) which aims to maintain a fair and open competitive market for power generation fuels in WA, and the Domestic Gas Reservation Policy (2006) which requires that 15% of gas from any future offshore development must be available for use within the State (where commercially viable). The key electricity legislation is the Electricity Industry Act 2004. This Act governs the operation and regulation of the WA electricity industry, specifically by: Providing for the establishment of a WEM Establishing an independent licensing regime Providing for the development of an Electricity Networks Access Code. The Code establishes a

framework for third party access to electricity transmission and distribution networks with the objective of promoting the economically-efficient investment in, and operation and use of, networks and services of networks in WA in order to promote competition in markets upstream and downstream of the networks.484

Conferring a number of electricity-related functions on the Economic Regulation Authority, including responsibility for the licensing and access regime, providing advice to Government on electricity tariffs, and electricity market surveillance

Providing for the establishment of a Western Power Network extension and expansion policy.485 Key documents to guide the development of electricity networks in WA are summarised in Table 9.3. Table 9.3: Key electricity planning documents

Document Description

Annual Planning Report (May 2009, with a new edition in October 2010)

Western Power publishes the Annual Planning Report to provide advice and guidance on the status of the transmission network and distribution system.486

Statement of Opportunities Report (2010)

The annual document published by the Independent Market Operator provides information to stakeholders in the WEM on opportunities for investment in generation capacity and demand side management over the medium term. The 2010 report places emphasis on the 2012/13 and 2013/14 Capacity Years. The report sets the amount of capacity required to be available from 1 October 2012, a key parameter of the Reserve Capacity Mechanism in the WEM. Information is also provided on forecast maximum demand and electricity consumption within the SWIS over the Long-Term Projected Assessment of System Adequacy (PASA) Study Horizon through to October 2021.487

9.2.3 Sector trends Major transmission network expansions in the SWIS There is a series of current and proposed projects that will provide transmission capacity for new proposed block mining loads and allow additional generation capacity to be added to the network, improving reliability and security of supply. The most significant are the Mid West Energy Project and the South West Transmission Reinforcement project. The Mid West Energy Project has two stages. The first stage called the Southern Section involves constructing a new 200km double circuit 330kV line from Neerabup to Eneabba together with establishing a new 330kV/132kV terminal at Three Springs as well as new switchyards and voltage support equipment. This will provide electricity to a number of planned mineral projects and power

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generation connections. The second stage called the Northern Section involves providing new transmission lines between Geraldton and the Southern Section. This project will probably not be needed until 2015/16.488 Figure 9.7 details the project’s infrastructure. Figure 9.7: Mid West Energy Project489

The South West Transmission Reinforcement project involves increasing the capacity of the bulk electricity transmission network by connecting the Perth metropolitan area to existing and proposed generators located in WA’s south-west. The main element consists of establishing a new330 kV double circuit transmission line connection from Collie to Perth. Due to the uncertainty regarding the timeframe for developing new generation in the area, the project has not progressed to regulatory approval stage at the time of writing.490 However, as much of the region is operating close to its capacity limits, such a bulk transmission reinforcement project will eventually be required. Increase in generation in the Pilbara The next decade will see massive expansion of resource projects in the Pilbara region. This will require a corresponding increase in electricity supply. As noted above, the Pilbara does not have a fully integrated and interconnected grid. In the absence of a coordinated approach to energy development, an ad hoc approach to growth can be expected. Network expansion is likely to be slow and fragmented, and will continue to be governed by loose arrangements. Additional inefficient and islanded generation may also be installed for individual mining projects, preventing the transition towards a more interconnected and optimised high voltage electricity transmission network based on the NWIS.

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Change in SWIS market share participants The ownership of generation and demand side credit ownership has changed significantly since 2005, as seen in Figure 9.8. Previously, Verve Energy dominated the supply but its dominance is waning. Figure 9.8: Participant market share since market commencement491

Growth in renewable energy Large-scale renewable electricity generation in WA started in 1993 when the Esperance Wind Farm and Red Hill landfill gas projects were commissioned. By 2008/09, 3.1% of all electricity consumed was produced by renewable sources. This figure is less than most other States, as seen in Table 9.4. Table 9.4: Capacity of renewable generation at 31 December 2008 (MW)492

Fuel type NSW & ACT1

VIC QLD SA WA TAS NT Snowy TOTAL

Hydro 3,966.1 620.4 161.4 2.5 30.1 2,279.6 0.0 3,676.0 7,060.0

BaGasse 15.5 0.0 362.6 0.0 6.0 0.0 0.0 0.0 384.1

Biomass 3.9 0.2 36.5 3.5 1.0 0.0 0.0 0.0 45.1

Black liquor 20.0 54.5 2.0 0.0 0.0 0.0 0.0 0.0 76.5

Geothermal 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1

Landfill gas 50.9 35.3 16.6 20.9 22.8 3.9 1.1 0.0 151.4

Sewage gas

3.5 18.1 4.5 5.5 1.8 0.1 0.0 0.0 33.5

Solar2 1.5 0.5 0.3 0.3 0.3 0.0 1.4 0.0 4.3

Wave 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5

Wind 16.7 191.9 12.5 482.4 202.6 142.3 0.1 0.0 1,048.4

Total 4,078.4 920.9 596.4 515.1 264.6 2,425.9 2.6 8,804.0 1. Includes Snowy region. 2. Solar capacity does not include solar hot water installations.

In WA, the vast majority of renewable energy comes from wind, followed by hydro and bio energy, as seen in Figure 9.9. More than half of the wind farm contribution comes from just two wind farms – Walkaway (90MW capacity, owned by Alinta) and Emu Downs (80MW, owned by Griffin Energy and Stanwell).

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Location Proponent Capacity (MW)

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Ord River Pacific Hydro Ltd 30 Hydro 1996 70

Denham Verve Energy 0.99 Wind 1999 4

Exmouth Verve Energy 0.06 Wind 2002 1

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Verve Energy 3.6 Wind 2004 11

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Coral Bay Verve Energy 0.82 Wind 2007 14 * Estimated capital cost at time of commissioning N/A: Either Not Available or Not Applicable

There are a number of renewable energy projects in an advanced stage of development, as seen in Table 9.6. However, the figure includes a number of large-scale solar thermal projects encouraged by the Australia Government’s Solar Flagships Program that were not selected for support and are unlikely to proceed. There are also a number of wind farms proposed for locations between Perth and Geraldton that can only be built once new transmission capacity in this region is built. Advanced projects include the: 206MW Collgar Wind Farm near Merredin, which will be WA’s largest wind farm. It is expected

to generate over 790,000MWh per year. Construction started in June 2010 and initial operations will commence in August 2011.497

CETO wave energy plant, which is a 5MW commercial demonstration wave energy plant being built by Carnegie Wave Energy Limited. Carnegie plans to commission the plant in 2011.498

Geothermal projects are new to WA and exploration licences were only issued recently. New World Energy plans an initial demonstration geothermal electricity plant expanding into commercial production with a plant up to 100MW from the year 2014.499 Table 9.6: Proposed major renewable developments in WA500

Stage of Development

Energy Source Number of Projectsa Proposed Installed Capacity (MW)

Estimated Capital Cost ($ million)b SWIS Off-SWIS

Conceptual N/A 16 1,997 N/A

Feasibility Wind 4 1 446 1,004

Bioenergy 3 1 58 160

Solar PV 0 1 1 6

Solar Thermal 1 1 200 800

Wave 1 0 10 94

Tidal 0 2 57 257

Wind 8 1 625 1,407

Bioenergy 5 0 120 270

Approvals Solar PV 1 3 2 14

Wave 1 0 5 47

Total 24 10 3,521 4,057 N/A: Either Not Available or Not Applicable a: Demonstration projects are counted as projects in their own right b: Estimates based on $/MW benchmark costs indicated by industry and costs of completed projects

The main driver of growth in large-scale renewable energy in the next decade will be the national Renewable Energy Target (RET) of 20% by 2020. The RET imposes a legal obligation for a percentage of the nation’s electricity to be generated from renewable energy sources. It is

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expected that the cost competitiveness of renewable energy generation will improve over time as economies of scale are achieved for particular technologies and carbon pricing is introduced. The percentage of Western Australia’s electricity that is supplied from renewable sources will largely depend on the growth in electricity demand and how much of this is met from renewable generation. Drivers in the growth in small-scale renewable energy, which is mostly rooftop photovoltaic (PV) systems, include the incentive for PV power offered by the Horizon Power and Synergy under the Renewable Energy Buyback Scheme for customers on the SWIS and in regional areas. This scheme has been operating for a number of years and pays residential customers who export power using residential photovoltaic, wind and micro-hydro systems to a grid, at prices equal to their electricity tariff rate (e.g. A2 tariff) less the GST component (10%).p From August 2010, a net feed-in tariff scheme commenced. This pays 40c/kWh for power and this is in addition to the price paid by the retailers as part of the existing Renewable Energy Buyback Scheme.501 Horizon Power residential customers receive a total of 58.93c/kWh502 and Synergy’s receive 47c/kWh from 1 July 2010.503 The feed-in tariff is limited to systems up to 5kW for Synergy customers and up to 10kW per phase for Horizon Power customers.504 Unlike most other States where the funds for the feed-in tariff are a subsidy paid for by other electricity customers via increased tariff, in WA the funds are derived from a WA Government budget allocation. Details of feed-in tariff schemes for other jurisdictions are listed in Table 9.7. Table 9.7: Feed-in tariff rates in other Australian jurisdictions505

Jurisdiction Current status Nature of scheme* Rate Duration

NSW Commenced in January 2010 Gross 60c/kWh 7 years

VIC Commenced 1 November 2009 Net 60c/kWh 15 years

QLD Commenced 1 July 2008 Net 44c/kWh 10 years (subject to review)

WA Commencing 1 August 2010 Net 47c/kWh (minimum) ** 10 years

NT Commenced 1 July 2009 in Alice Springs only

Net 45.76c/kWh (capped at $5 per day, then reverts to 23.11c/kWh)

To be determined

ACT Commenced in March 2009 Gross 50.05c/kWh reducing to 45.7c/kWh in July 2010

5 years

SA Commenced on 1 July 2008 Net 44c/kWh 20 years * Nature of the scheme options: Gross tariffs, where the consumer is paid for all the electricity their system generates; and net tariffs, where the consumer is only paid for the generated electricity they export to the grid, not for the proportion of generated electricity they use themselves. **WA’s 47c/kWh rate made up by 40c/kWh premium from WA Government plus 7c/kWh fair and reasonable rate from retailer.

Growing electricity demand The IMO forecasts that average annual peak growth in demand will be 4.4% through to 2020/21 and 3.7% for average energy.506 Figure 9.10 shows low, medium and high growth forecasts based on a 10% Probability of Exceedance (POE). POE refers to the probability that a forecast maximum demand figure will be exceeded.

p Previously this was the case but no longer. Synergy now pays a fair and reasonable rate of 7c/kWh (from 1 August 2010), while Horizon Power with its higher costs continues to pay one for one minus GST.

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Figure 9.10: SWIS load history and IMO forecast507

The key drivers of growth in the SWIS are the penetration of air conditioners, population increase and industry activity.508 The increase in the use of air-conditioning has been one of the key reasons that the peak summer demand has been increasing faster than the average demand. The highest peak demand occurs after a consecutive string of hot and humid days with temperatures between the high 30s and mid 40s, with hot and humid conditions overnight.509 510 Heating loads are the main cause of peak load growth in winter. As networks are designed to meet the need of peak demand, a faster rate of growth for peak demand compared to average demand can result in a declining asset utilisation and hence, increased cost of electricity. The profiles for typical residential, commercial and industrial loads are shown in Figure 9.11. Figure 9.11: Profile of electricity consumption in SWIS511

The actual profile of an area depends on its load composition. Figure 9.12 shows the annual peak growth in demand for the SWIS load area, averaged over the period from 2009 to 2014.

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Figure 9.12: Forecast annual load growth by load area, averaged from 2009 to 2014512

Ageing transmission and distribution infrastructure Many SWIS, NWIS and Esperance transmission and distribution assets are reaching the end of their useful life. This is because much of the network was built from the 1960s through to the 1980s, and many assets have a design life of about 50 years, as seen in Table 9.8. However, just because assets are ageing, it does not imply that they will fail. Their actual life depends on the design, usage, equipment specification and maintenance. But generally, there is a relationship between asset age and declining performance and increased operating expenditure due to more preventive and corrective maintenance being required. Table 9.8: Design life of assets513

Asset Design life of assets (years)

Transmission and zone substations and switching stations 45

Power transformers 50

Transmission and sub-transmission steel tower lines 60

Transmission and sub-transmission pole lines (concrete poles) 55

Transmission and sub-transmission underground cables 45

Distribution substations and switching stations (ground mounted) 45

Distribution substations (pole mounted) 45

Distribution overhead lines (concrete poles) 55

Distribution overhead lines (wooden poles) 45

Distribution underground cables 60

Metering equipment 25

Substation secondary systems (SCADA and protection systems, excluding cabling) 15

Substation control building 40

Communications systems 10

Street lighting 20

Growing focus on demand management The WA Government and the electricity sector are implementing a range of initiatives to reduce demand as a way of deferring network augmentation, reducing operating costs and reducing

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environmental impact from generation that would otherwise be required to meet growth in demand and network security requirements. Initiatives to achieve this include: Horizon Power offering energy efficiency audits for businesses. Western Power implementing a four-year Smart Grid trial of about 9,000 smart meters in

Perth’s Eastern Corridor, and 2,500 smart meters in Denmark and Walpole as part of the Green Towns project. [The Green Town project is a series of environmentally-friendly energy initiatives developed by Western Power in partnership with the Denmark and Walpole communities and the South Coast Power Working Group (SCPWG). The project aimed to reduce peak power consumption and overall energy consumption by 10% by 2010.514] Smart meters are claimed to encourage behaviour changes in customers by making them aware of the electricity consumption and its cost. They have great benefits to the network operator as they allow them to have a better understanding of the network’s operation, to remotely read meters and to allow remote connection/disconnection.

Western Power installing direct load control of air conditioners during peak periods. Western Power installed these devices in air conditioners in 400 homes during a trial over 2007/08 and it showed that a 27% reduction in peak power use can occur without any significant loss of comfort.515

9.3 Performance

9.3.1 SWIS WEM reliability and security The WEM’s performance can be judged against its legislated objectives, which include improving supply reliability, encouraging private investment, and providing downward pressure on prices. Reliability of supply has improved with the growth in network capacity through the functioning of the capacity credit arrangements. Private investment in generation has increased significantly as reflected in the commissioning of new generators (NewGen has invested in two new gas-fired generation plants, Griffin has invested in two new coal fired generation plants), and the decline in Verve Energy’s Capacity Credits from 77% of the entire market in 2007/08 to 57% by 2011/12.516 Pressure on prices is, to some degree, being achieved through the increase in competition, but given that the market is not fully contestable and there is a lack of competitors in various regions and sectors, competition is far from strong. The Economic Regulation Authority considers that ‘the WEM has generally operated effectively since market commencement, and that outcomes in the WEM are continuing to reflect increasing competition in both the generation and retail sectors’.517 There are a number of problems with the WEM that limit SWIS reliability, efficiency and competition. These are well recognised and identified in the Oates Report and the Strategic Energy Initiative issues paper. The Economic Regulation Authority identifies the key problems as: The unconstrained network planning approach used in the WEM. The current approach is that

all generators connected to the SWIS have the ability to generate at the same time, meaning that significant network augmentation may be required. This can lead to inefficient over-investment in the grid so that all generators can supply at the same time, regardless of whether they are intermittent generators or not. An alternative approach, used in the National Electricity Market, is a constrained approach that allows new generators to be connected to the network in circumstances where their access to the network may be limited.

Delays in processing network access applications. Currently, delays can be extensive in obtaining network access approval from Western Power for new generator connections to the transmission network. Such approval is a pre-condition for receiving certification of Reserve Capacity for new facilities. The delays are slowing down the rate by which new generation plants come online.

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The decommitment of baseload thermal plants overnight due to relatively low overnight load profiles and an increasing level of intermittent energy supply. Generally, the dispatch of wind-powered energy occurs whenever the wind farms operate (that is, they are afforded a ‘must run’ status in the WEM). As this is often overnight due to regular night-time winds, electricity from baseload thermal power stations may not be required. However, the nature of thermal plants means that they are suited to continuous operation. The displacement by intermittent generators increases the average electricity cost from these plants, which in turn can result in higher overall electricity prices.

The need to improve real-time balancing arrangements to more efficiently match system generation and load. Currently the balance of supply and demand is done via both a day-ahead system and a real-time system. The day-ahead market settles one day ahead of the actual Trading Day via bids and offers from Market Participants. Real-time balancing is done on the day and involves the WEM’s System Manager scheduling Verve Energy generation plants to balance the system around Market Participants. The consequence of this arrangement is that Verve Energy often has to provide the balancing services on non-commercial terms. As the dominance of Verve Energy’s generation reduces in the SWIS, it will become impractical and unachievable for Verve Energy to undertake this role.518 Consequently, the provision of day-to-day operational services to balance generation and loads will need to be undertaken by a broader group of generators.519 A suite of market reforms currently being undertaken by the IMO and its advisory body (the Market Advisory Committee – or MAC) is considering potential changes to the current balancing mechanism.

An additional area of concern, given the isolated nature of the SWIS, is the lack of market incentives to encourage generators to maintain dual-fuel ability, although it is recognised that a high level of dual-fuel capability already exists in the SWIS. SWIS generation The key performance measure for a generation plant is its ability to deliver a reliable supply when required. Its availability is affected by the number of internal plant planned outages (e.g. for maintenance and renewals), internal plant forced outages (e.g. plant breakdowns) and external forced outages (e.g. fuel unavailability, third party industrial actions). Internal plant outages usually increase with a plant’s age, and when major upgrades occur. Since 2006, there has been a continual reduction in outage rate.520 A reason for this has been that the average age of generation capacity has decreased, as seen in Figure 9.13, resulting in plant operations being more reliable. Figure 9.13: Average age of generation capacity521

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Another indicator is the availability of generation to meet demand. In May 2010, the IMO completed its annual Expression of Interest process to identify new sources of generation and DSM capability for 2012/13. The EOI identified a total of 644MW, of which 309MW comes from thermal, 108MW from renewable and 227MW for DSM.522 The IMO has stated that there are sufficient Capacity Credits to meet the Reserve Capacity Requirement until 2011/12.523 While the installed and committed plants are adequate to meet demand to 2013, from 2014 to 2028, some $10 billion is required to build new and replacement plants.524 The Varanus Island incident in June 2008, which cut domestic gas supplies by one third, exposed the extent to which the SWIS depended on gas for its electricity generation. At that time, some 60% of electricity supplied in the State was gas-fired.525 Adequate electricity supply was achieved during this gas curtailment as many gas-fired power plants were able to switch to diesel. To better manage such shortages in the future, the WA Government established a Gas Supply and Emergency Management Committee. For details, see the Gas section. A growing electricity generation vulnerability in the SWIS is the sole source of supply for coal used for generation. The coal is supplied by Wesfarmers after winning the supply contract from its competitor, Griffin Coal. The price negotiated at that time is believed to be less than the cost of supply for Wesfarmers, meaning that it may seek a price increase rather than supply coal at a loss. A consequence of Wesfarmers winning the contract was that the Griffin Group built its own coal power station to provide a buyer for its coal. Griffin Coal is now under voluntary administration, due to its inability to meet the cost of servicing its debts. It is currently involved in an asset sale process, which includes both of the Bluewaters power station units. Additional uncertainty in the generation sector in WA arises in the financial position of Alinta Energy. Alinta (formerly Babcock & Brown Power) owns large gas-fired cogeneration facilities in the south-west as well as gas-fired plant in the NWIS. Alinta, saddled with excessive debt, is implementing a number of structural changes, including attempts to deleverage its debt position or sell off parts or all of its assets. SWIS transmission The performance measures for the transmission network are: Circuit availability. This is the percentage of total possible hours available. System Minutes Interrupted. This is the number of minutes that power is available but cannot

be sent out because of faults on the transmission equipment. Loss of Supply Events. This is the number of incidents where loss of supply exceeds 0.1 or 1.0

system minutes. This only relates to unplanned outages.526 Table 9.9 provides transmission performance figures for SWIS. Table 9.9: Transmission performance figures

2004/05 2005/06 2006/07 2007/08 2008/09

Circuit availability 99.005 98.143 98.039 98.357 98.265

System Minutes Interrupted -messed network (minutes) 5.846 5.146 14.243 8.803 7.628

System Minutes Interrupted - radial network (minutes)

1.459 0.917 1.4 1.835 2.017

Loss of Supply Events (number of events > 0.1 system minutes)

24 20 30 27 18

Loss of Supply Events (number of events > 1 system minutes)

0 0 3 2 3

Average outage duration 484 744 834 715 501

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SWIS distribution Performance for the transmission and distribution network is measured by its reliability and quality of supply. Performance measures for these are: System Average Interruption Duration Index (SAIDI). The sum of the duration of each

sustained customer interruption (in minutes), divided by the total number of distribution customers. SAIDI excludes momentary interruptions (one minute or less duration).

System Average Interruption Frequency Index (SAIFI). The total number of sustained customer interruptions, divided by the total number of distribution customers. SAIFI excludes momentary interruptions (one minute or less duration).

Quality of supply. The quality of supply factors consist of voltage (e.g. sustained overvoltage and undervoltage) voltage variation (e.g. fluctuations, dips, switching transients), current (e.g. direct current, harmonic content and inter-harmonics) and other qualities (e.g. signalling reliability, noise and interference, level of supply capacity).

Table 9.10 provides normalised SAIDI and SAIFI figures, which exclude severe weather events, transmission outages, directed load shedding, and where the distributor cannot reasonably be expected to mitigate the event by prudent asset management.527 This provides a better insight into the underlying quality of the network. SAIDI has been above the performance target of 203 minutes since 2006/07, and Western Power states this is due primarily to changing economic conditions in WA. It stated that ‘SAIDI targets and associated work plans were established under a buoyant State economy, focussing expenditure on capacity expansion and public safety. The subsequent economic decline resulted in the completion date for some of the scheduled reliability and improvement work being pushed out to 2009/10’. The reason for the improvement in performance between 2007/08 and 2008/09 was due to ‘a reduction in outages caused by equipment failure, lightning, vegetation and vandalism, however, we have seen an increase in outages caused by bushfires and vehicle damage’.528 Western Power has experienced steady improvement across its performance reliability indicators for 2009/2010, excluding the extreme weather effects of the storms of 22 and 23 March 2010. Table 9.10: Normalised SAIDI (minutes) and SAIFI for Western Power

2004/05 2005/06 2006/07 2007/08 2008/09

SAIDI 216 200 229 230 221

SAIFI 2.31 2.17 2.52 2.50 2.20

Quality of supply performance measures are defined in the Electricity Distribution Code. Monitoring and reporting of compliance against these performance factors is based on the distributors’ monitoring program and customer complaints received by it. Table 9.11 identifies the number of customer complaints about quality of supply issues. Table 9.11: Customer complaints for quality of supply (complaints per 1,000 distribution customers)

2004/2005 2005/2006 2006/2007 2007/2008 2008/2009

Customer complaints 2.73 2.52 2.06 1.87 1.39

Each of the 13 sub-transmission and distribution load areas has unique characteristics and different load growths, resulting in different constraints on each, as seen in Table 9.12. An overarching problem for Western Power’s network is addressing ageing parts of the network. More than 30% of the network is over 40 years old.529 Unless it invests significant amounts in renewals and upgrades, it will have difficulty in maintaining its current levels of reliability.

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Table 9.12: Load constraints for SWIS load areas530

Load area Immediate network constraints

Bulk transmission Largely driven by generation location decisions

Northern Terminal Thermal capacity of transmission lines and substation capacity shortfalls

Muja Voltage constraints on long lines and distribution network limitations

Kwinana Thermal and voltage constraints on transmission lines and substation capacity shortfalls

Cannington Substation capacity shortfalls

Bunbury Thermal and voltage constraints on transmission lines and substation capacity shortfalls

Western Terminal Substation capacity shortfalls

East Perth & CBD Substation capacity and distribution feeder circuit shortfalls

Southern Terminal Substation capacity shortfalls

South Fremantle Thermal capacity of transmission lines and substation capacity shortfalls

East Country Voltage constraints on transmission lines and substation capacity shortfalls

Eastern Goldfields Voltage and stability constraints on transmission lines; no further generation is possible in this region without detailed system studies

North Country Highly sensitive to connection of generation and/or loads; no further generation is possible in this region without transmission reinforcements

Guildford Terminal Thermal line constraints and substation capacity shortfalls

Currently, the whole of Western Power’s bulk transmission network is at capacity. No new generation facilities over 40MW (approximately) are able to connect to the SWIS. Additionally, Western Power currently requires new generation facilities to meet deep connection augmentation costs. This means that new generation facilities that require connection are liable for significant connection costs. To encourage new (small-scale) generators to connect to areas where there is spare network capacity and hence low connection costs, Western Power produced a map in 2010 showing spare connection capacity relevant for small to mid-sized generators up to 30MVA. The map is Figure 9.14.

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Figure 9.14: Generation capacity connection map531

9.3.2 NWIS The adequacy of the NWIS is increasingly becoming questioned as demand increases, electricity input costs rise and more load centres are being planned. In some areas, the NWIS is already inadequate, including in relation to reliability.532

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The Energy Supply Association of Australia has stated that problems with the current NWIS include that ‘there is no framework governing the operation of the system, no unified system operator with full system visibility, no formal procurement of ancillary services or plans for emergency management … no governance framework or single body exists for coordinated planning of new infrastructure and … the lack of a centralised market mechanism may be preventing the entry of new investors’.533 A large proportion of the generation plant in the Pilbara is also ageing and is in need of replacement. These factors, combined with the rapid growth of electricity demand in the region, provide a historic opportunity to invest in an integrated transmission system to support a major shift in the type and size of generating assets in the Pilbara.534 Table 9.13 provides normalised SAIDI and SAIFI figures for the NWIS. Normalised figures exclude SAIDI events of less than one minute, but do include generation or transmission outages that are within the control of Horizon Power being the generator and transmission system owner. The table shows that there has been an improvement in both over the last four years. It is worthy to note, however, that the figures below do not include outages or network events experienced on the sections of the NWIS owned and operated by other private sector entities. Table 9.13: SAIDI (minutes) and SAIFI (interruptions) for NWIS535

2005/06 2006/07 2007/08 2008/09 2009/10

SAIDI 563 1,018 111 113 85

SAIFI 3.45 2.53 1.45 1.89 1.93

9.3.3 Isolated or islanded power systems The quality of isolated and islanded systems varies, as seen in Table 9.14, which provides selected normalised SAIDI and SAIFI figures. Horizon Power’s 2008/09 SAIDI target outage duration is less than 290, however, its actual was 336. Its SAIFI target frequency of outages is less than 5 and it achieved 4.92.536 Table 9.14: Selected SAIDI (minutes) and SAIFI for Horizon Power systems537

2005/06 2006/07 2007/08 2008/09 2009/10

SAIDI

Esperance 289 1,386 653 782 51

Esperance Rural 1,437

Hopetown 898 2,130 842 342 82

Hopetoun Rural 880

Broome 118 172 425 401 61

Horizon Power average 366 774 318 336 162

SAIFI

Esperance 8.96 11.26 11.62 5.51 1.33

Esperance Rural 10.91

Hopetown 9.38 14.93 8.17 2.72 1.77

Hopetoun Rural 6.76

Broome 2.45 3.30 10.08 8.62 1.08

Horizon Power average 5.09 6.11 6.67 4.92 2.43

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9.4 Future challenges The challenges to achieving improvements in electricity infrastructure are: Reform of the WEM. Given the recognised problems with the WEM such as the unconstrained

approach to network planning and the lack of proper market mechanisms for the provision of balancing and ancillary services, a coordinated approach to WEM reform is required to ensure that decisions on market design, regulatory and structural issues are complementary. The multiple reviews and reforms currently underway should be consolidated into one reform process, and clear and coordinated policy on the future of the market be developed.

Maintaining competition in the WEM. The State-owned entities, while reducing their respective market shares in the SWIS, still remain the dominant entities and enjoy significant advantages as incumbents. The generation cap (on Verve) and prohibitions on retailing (Verve) and generating (Synergy) are up for review in the coming months and years. These regulatory constraints have been essential for the attraction of private investment into the SWIS. The future role of State-owned utilities in the competitive markets of the SWIS (retail and generation) needs to be addressed.

Raising electricity prices to cost-reflective levels. The current tariffs do not provide true cost-reflective pricing. This is true in both the SWIS and elsewhere in the State. Prices need to be raised along a glide path that reflects broad social and economic considerations.

Determining the future of the NWIS. The Pilbara region’s electricity system is not interconnected nor integrated to a sufficient degree to provide reliable, secure and lowest cost power. In an environment where future demand is growing rapidly, a decision on the evolutionary path for the NWIS is required. Major new energy infrastructure decisions are pending. Proper planning and coordination is essential to ensure that efficient transmission lines and generators are developed, in preference over small-scale, inefficient systems.

Pressure on fuel supplies. Strong growth in gas exports and domestic industrial and gas generation demand has put pressure on supplies resulting in price rises. While there is some opportunity to switch fuels, the prevalence of gas-fired generation means that increased gas prices will result in increased electricity prices. In a system such as the SWIS, where over 50% of electricity is produced by gas-fired generation (comparable to around 10% in the NEM), a doubling of gas prices over a short period of time will see enormous changes to the cost structure of the wholesale electricity supply sector.

Renewing ageing infrastructure. Much of the State’s transmission and distribution infrastructure is nearing the end of its design life. A significant rise in the level of upgrades and renewals of network infrastructure will be needed, requiring a large pool of labour resources.

Accommodating increased renewable (intermittent) generation in the SWIS. It is likely that the amount of intermittent generation connected to the SWIS will increase significantly over the next decade. The Collgar Wind farm (due in 2011) will double the existing intermittent capacity. There are significantly more wind farms and solar facilities in planning stages. Given the low overnight load of the SWIS, as well as the expected higher costs of load following (given future gas price forecasts), this increase in intermittent generation will require careful management.

Implementing significant demand management measures to constrain peak growth in demand. Peak demand is currently growing faster than average demand. Peak growth in demand needs to be reduced to the level of average growth in demand, which will increase asset utilisation and lower the need for new infrastructure. Achieving a significant reduction in demand, particularly given air-conditioning demand on hot days, will be a major challenge and will necessitate the roll-out of smart meters to enable time-of-use pricing regimes.

Capturing the opportunities of smart network technology. There is a need to prepare for an increasingly intelligent network, with proliferating network-integrated digital technologies, and growing numbers of small and micro generators such as solar/photovoltaic and wind linking into the network. A smart grid is a key technology to accommodate lower-carbon, distributed and intermittent generation sources and improve demand side efficiencies. To achieve this, smart meters, time of use pricing and other regulatory/physical changes will be

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required. Achieving this will be expensive and disruptive and require a long-term implementation plan.

9.5 Report Card Rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Electricity B- B- C+ B-

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s electricity infrastructure has been rated B-. This rating recognises that the expansion of generation and transmission network in the South West Interconnected System has been adequate to meet the high growth in demand experienced with the expansion of population. However, problems exist including the need for reform of the Wholesale Electricity Market, the lack of transmission capacity in many urban and regional areas, reliability concerns in regional areas, and ageing transmission and distribution assets. The NWIS is sub-optimal for today’s electricity needs in the Pilbara region. The State’s isolated electricity systems are generally in good condition and many remote communities have received improved electricity supplies over the last few years due to the regularisation program. Positives that have contributed to the rating are: Expansion in the SWIS generation capacity and the introduction of private capital into this

market Western Power’s transmission and distribution network upgrade (though the main transmission

upgrades to the north and south are still far from certain) Continuation of the State and Pilbara Underground Power projects Growth in renewable generation in the State (bringing with it the requirement for careful

management of increasing intermittent generation) Regularisation of remote communities.

Negatives that have contributed to the rating are: Ageing transmission and distribution infrastructure across the State Uncertainty about the future of the NWIS Peak demand rising faster than average demand Congestion and network constraints in certain areas of the transmission network Long-term electricity price path uncertainty (mainly due to increasing gas prices) Issues for Western Power arising out of economic regulation Lack of a plan defining the future of the NWIS.

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10 Gas

10.1 Summary

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Gas C+ B+ C+ C

This rating recognises that WA is fortunate in having significant gas reserves and has efficient gas transmission pipelines that have expanded in line with demand from large customers. However, the single points of failure in production and transmission infrastructure are a major concern, as is the lack of a long-term gas policy with a supportive regulatory framework that can deliver infrastructure to meet the rapidly evolving gas demand in WA. Since 2005, the major gas sector developments have been the: Increase in exploration and export of LNG Expansion in transmission pipeline capacity Two major incidents when domestic gas supplies were disrupted Increase in gas prices Increasing uncertainty about the supply and demand of domestic gas

Recently completed and in-progress major infrastructure projects include: Significant capacity expansion in the Dampier Bunbury Natural Gas Pipeline (DBNGP) and

other pipelines Construction of a 7km pipeline with a Pressure Reducing Station feeding into a 10km pipeline

to reinforce the Rockingham distribution network. Challenges to improving gas infrastructure include: Managing the risk of loss of supply Developing a long-term gas policy with a supportive regulatory framework Encouraging investment in production and transmission without requiring firm contracts being

signed Expanding the distribution networks.

10.2 Infrastructure overview

10.2.1 System description Domestic gas infrastructure comprises the following components: Production and storage Transmission Distribution Retail.

This section does not cover liquefied petroleum gas (LPG), biomass and other fuel gases. Production and storage Over 95% of gas for WA’s domestic market is provided by the North West Shelf Joint Venture, that supplies 63% of the total gas, and Apache-led joint ventures, which supplies 33%.538 The rest is

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supplied by several fields in the onshore Perth Basin, notably Beharra Springs operated by Origin Energy, and Dongara and Woodada operated by AWE.539 The North West Shelf Joint Venture is Australia’s largest oil and gas resource development and produces about 40% of Australia’s oil and gas production, and 65% of WA’s production.540 It sources its oil and gas from the Carnarvon Basin, and domestic gas is produced at its Karratha Gas Plant. Its facilities are operated by Woodside. The Joint Venture has six participants – BHP Billiton Petroleum (North West Shelf) Pty Ltd, BP Developments Australia Pty Ltd, Chevron Australia Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd, Shell Development (Australia) Pty Ltd and Woodside Energy Ltd (Operator). The Apache-led joint ventures are the John Brookes field, developed by Apache Energy and Santos, which produces 25% of the domestic gas supply, and the Harriet Joint Venture, operated by Apache Energy, which produces 8%.541 In 2008/09, WA’s total gas production totalled 29.3 billion cubic metres (BCM) of which 8.6BCM were sold into the WA market. As a proportion, WA’s domestic gas market accounts for only 29% of WA’s total gas production. The rest is mostly exported as LNG. In 2009, WA exported 845PJ of LNG and 355PJ (about 973TJ/d) of domestically-consumed gas.542 The international demand for LNG has been central to creating the WA oil and gas industry because domestic gas sales are too low to have justified the huge investment in developing the Carnarvon Basin fields. Domestic gas sales vary enormously on a year-to-year basis. Over the 10-year period from 1997/98 to 2007/08, average yearly growth was 2.9% per year. In 2006, growth was 13%, in 2007 it was 13% and in 2008 it declined by 7% due to the disruption to supply from Varanus Island and the economic slowdown. Sales in 2008/09 were 8.6BCM and peak sales in 2007/08 reached 940TJ/d.543 544 Transmission pipelines and storage There are over 30 gas transmission pipelines in WA, with a total length in excess of 7,000km. These are detailed in Table 10.1 and illustrated in Figure 10.1. Table 10.1: Main natural gas pipelines in WA545

Route Year commissioned

Length (km)

External diameter

(mm)

Pipeline operator

Pipeline owner

Dongara to Perth/Pinjarra (Parmelia Gas Pipeline)

1971 416 356 APA Group APA Group

North Rankin to Withnell Bay

1984 134 1,016 Woodside Energy

Woodside Energy

Dampier to Bunbury (including laterals)

1984 1,789 660 WestNet Energy1,2

DBP2,3

Karratha to Cape Lambert 1984 57 273

Nangetty to Geraldton 1985 58 168

Gascoyne Junction to Carnarvon

1988 170 150 Epic Energy Epic Energy

Tubridgi Pipeline (Tubridgi to Dampier/Bunbury)

1991 88 168 BHP Billiton BHP Billiton

Griffin Pipeline (Tubridgi to Dampier/Bunbury)

1991 88 273 BHP Billiton BHP Billiton

Varanus Island to Dampier/Bunbury

1993 100 324 Apache Energy

Apache Energy

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Route Year commissioned

Length (km)

External diameter

(mm)

Pipeline operator

Pipeline owner

Thevenard Island to Tubridgi

1993 44 168 WAPET

Griffin to Tubridgi 1993 70 200 BHP Billiton BHP Billiton

Karratha to Port Hedland 1995 219 457 Epic Energy Epic Energy

East Spar to Varanus Island

1996 22 356 Apache Energy

Apache Energy

GGT Pipeline to Newman lateral

1996 47 219 Goldfields Gas Transmission

APA Group (88.2%), Babcock & Brown Power (11.8%)4

Kalgoorlie to Kambalda 1996 44 219 Southern Cross Pipelines Australia

APA Group

Goldfields Gas Pipeline (Yarraloola to Newman/Kalgoorlie)

1996 1,378 400/350 Goldfields Gas Transmission

APA Group (88.2%), Babcock & Brown Power (11.8%)4

Pilbara Pipeline System to Wodgina lateral

1996 80 457 Epic Energy Epic Energy

Wiluna to Jundee 1997 45 114 Newmont Mining

Newmont Mining

Leonora to Murrin Murrin 1997 85 219 APA Asset Management5

APA Group5

Port Hedland main to Burrup Peninsula

1998 24 610 Epic Energy Epic Energy

Dongara pipeline 1998 20 114 APA Asset Management5

APA Group5

Varanus Island to Dampier/Bunbury

1999 100 400 Apache Energy

Apache Energy

Midwest pipeline (Dampier/Bunbury main to Windimurra)

1999 353 203/178 APA Group APA Group (50%), Horizon Power (50%)

Wagerup to Worsley 1999 58 450 WestNet Energy1,2

DBP1,3

Kambalda to Esperance 2004 340 150 Esperance Pipeline Company

WorleyParsons, ANZ Infrastructure Services6

Port Hedland to Telfer gold mine

2004 443 - APA Group APA Group

Telfer to Birla Nifty 2006 47 156 APA Group APA Group

Dampier Bunbury Stage 4 expansion

2006 217 750 WestNet Energy1,2

DBP1, 3

Dampier Bunbury Stage 5A expansion

2008 570 660 WestNet Energy1, 2

DBP1, 3

Angel Gas Pipeline 2008 49.1 - Woodside Energy

Woodside Energy

1. In August 2007, Babcock & Brown Infrastructure acquired the following assets from Alinta Ltd, among other related interests: the Tasmanian Gas Pipeline, a 20% share in the Dampier to Bunbury Natural Gas Pipeline, a 71.4% share in AlintaGas Networks (WA) and Alinta asset management business in WA (including a 51% share in Alinta Asset Management Pty Ltd).

2. The portion of Alinta Asset Management Pty Ltd in which Babcock & Brown Infrastructure has an interest began trading as WestNet Energy in August 2007.

3. Dampier Bunbury Pipeline (DBP) is the trading name of the DBNGP group of companies, ultimately owned by a consortium comprising DUET (Diversified Utilities and Energy Trusts) – 60%; Alcoa – 20%; and Babcock & Brown Infrastructure – 20%.

4. In August 2007, Babcock & Brown Power acquired Alinta’s 11.8% interest in the Goldfields Gas Pipeline. 5. In July 2007, the APA Group completed the acquisition of Origin Energy’s gas infrastructure assets. These assets include a 17%

interest in Envestra, the Origin Energy Asset Management business, the SESA pipeline and a 33.3% interest in the SEA Gas pipeline. 6. ANZ Infrastructure Services Ltd completed the acquisition of WorleyParsons’ 50% interest in the Esperance Energy Project in April

2009, increasing its interest in the Kambalda to Esperance pipeline to 100%.

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Figure 10.1: WA’s gas transmission network546

WA’s most critical pipelines are the DBNGP and the Goldfields Gas Pipeline. The DBNGP carries gas from the North West Shelf to Perth and onwards to the south-west corner of WA. It was commissioned in 1984 and since then has undergone seven expansion programs. Since 2004, some $1.7 billion has been invested in the DBNGP and the pipeline’s capacity has increased since 2005 by over 50%,547 bringing its capacity to over 850TJ/day.548 The most recent expansion (Stage 5B) was completed in early 2010.

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The Goldfields Gas Pipeline takes gas from the North West Shelf to mining customers in the Pilbara, Murchison and Goldfields regions of WA for industrial use and power generation. Over time, the number of laterals connected to each has increased, bringing gas to major industrial centres and power stations. There is only one commercial underground gas storage facility in WA – the Mondarra Gas Storage Facility near Dongara. The facility is located adjacent to the two pipelines servicing Perth (Parmelia Gas Pipeline and DBNGP). It receives gas from the DBNGP, stores it in a depleted gas reservoir, and delivers gas to Perth and beyond via the Parmelia Pipeline. Its owner, APA, is examining options to expand the facility by increasing the flow rates in and out of the gas reservoir, which will enable the expanded facility to make a significant contribution to gas supply assurance to the Perth Metropolitan area and in the Perth to Bunbury region.549 Gas is also stored in pipelines (known as Linepack) but this does not provide a substantial storage volume compared to usage rates. For instance, DBNGP’s Linepack amounts to a range of plus or minus 300TJ/day. This is equivalent to about half a day’s production from the North West Shelf Joint Venture, or a full day’s production of 600TJ/day in terms of total ‘swing capacity’.550 Synergy notes that there is currently only enough gas storage in WA to supply one generator for one day at present output and even if storage was to be expanded, there would only be enough gas available to supply a single generator for no more than a few days.551 Producers and the ACCC point to storage as an issue. However, this is not a view shared by gas infrastructure operators such as DBP or actual gas consumers.552 A recent report commissioned by APPEA also does not consider any lack of gas storage options as a significant market barrier:

‘Australia’s need for storage facilities is mitigated by the fact that gas production facilities are generally located close to the main demand centres. Gas production matches demand and Australia relies on spare pipeline capacity to deal with the supply/demand mismatch. This spare capacity acts effectively as gas storage. Unlike other countries, most of Australia is not exposed to strong seasonal swings in demand. However, Victoria, Tasmania and the ACT experience seasonality in winter demand and the storage facilities do not always solve the problem as they have limited capacity. Whilst it would be ideal to have additional storage facilities in key locations, an option to increase pipeline capacity will also increase flexibility in the markets.553

Distribution There are three gas distributors in WA supplying natural gas and LPG. As can be seen from Table 10.2, the largest is WA Gas Networks (WAGN). WAGN’s networks serve about 600,000 customers, and consist of 12,773km of pipelines. For the year 2008/09, total gas consumption across its networks was 27,977TJ, which was less than the year before when consumption was 29,580TJ.554 Table 10.2: Residential and non-residential customer connections at 30 June 2009555*

Licensee Residential Customer Connections

Non-Residential Customer Connections

Total Customer Connections

Total Connections

New Connections

Total Connections

New Connections

Total Connections

New Connections

WAGN 601,595 16,008 8,699 652 610,294 16,660

Esperance power station

211 30 31 3 242 33

Wesfarmers Kleenheat

812 40 19 0 831 40

State total 602,618 16,078 8,749 655 611,367 16,733

* Origin Energy has also constructed 8.4km of gas main to distribute LPG in Kalbarri, but no gas was supplied to customers during 2008/09.556

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The assets of each of the distribution networks are detailed in Table 10.3. Table 10.3: Distribution Network Construction Information by Distributor (as at 30 June 2009)557

Asset type Asset sub-type

WAGN Esperance power

station*

Wesfarmers Kleenheat*

High Pressure

Medium Pressure

Low Pressure

Medium Pressure

Medium Pressure

Length of gas main (km) constructed from

Cast Iron 0 0 52.3

0 0

Unprotected Steel

0 91.4 137 0 0

Protected Steel

737.2 10.6 0 0 0

PVC 0 5,970.0 3,679.3 0 8.7

Polyethylene 525.0 1,445.0 41.2 35.2 15.6

Other 0 44.3 40.8 0 0

Total length of distribution mains installed and in service (km)

1262.2 7,561.3 3,950.65 35.2 24.3

Number of service connections per km of gas mains

47.2 6.9 34.2

* Esperance power station and Wesfarmers Kleenheat do not have any high pressure or low pressure mains

Over the last five years, the length of WAGN’s pipelines has grown at the rate of 260km/year and its customer connections at the rate of 20,000 new connections per annum on average.558 Its growth is primarily attributed to the population growth in and around Perth.559 One infrastructure focus of WAGN is replacing its cast iron and unprotected steel mains in Fremantle. Some of these pipes are nearly 100 years old and have limited capacity for the network to grow and maintain integrity without major reinforcement. The network is being operated at elevated pressure to ensure reliability of gas supply and therefore could not support the redevelopments that are occurring in the area. Over 2010/11, WAGN intends to replace 5km of cast iron and 2km of low-pressure steel mains.560 The largest of WAGN’s distribution systems, Mid West and South West Gas Distribution System (MWSW GDS), is regulated, meaning that a determination at the beginning of the regulatory period sets the price increases over that period, access terms and conditions, tariffs and services, extensions, expansions, trading, capacity management and tariff policies that third parties (retailers) may access. WAGN’s current access arrangement for its MWSW GDS started in 2005 and was due to expire in 2009 but has been extended until the end of 2010. Retail As of June 2010, there are five licensed gas retailers in WA as detailed in Table 10.4. Across all retailers, between 2007/08 and 2008/09, residential customer growth was 3.4% and 0.4% for non-residential customers.561 Alinta Sales dominates the market and supplies 99.8%562 of total small use customers.q

q A small use gas customer consumes less than 1Terajoule (1TJ) of gas per annum.

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Table 10.4: Residential and non-residential customers by retailer563

Licensee Gas licence area Total number of customers 2008/09

Alinta Sales South Western Coastal Area (from Gingin to Busselton including the Perth metropolitan area) Kalgoorlie-Boulder Albany

594,302

Synergy South Western Coastal Area 98

Wesfarmers Kleenheat

Margaret River Leinster

831

WorleyParsons Esperance 242

State Total 594,302

Full retail gas contestability commenced on 31 May 2004. This allowed new gas retailers to enter the market, thereby providing retail choice for all gas customers in the State.564 However, while Synergy provides some competition in the South Western Coastal Area, it is excluded from selling to customers who consume less than 0.18TJ per annum, which is the majority of small and residential customers. This threshold, which was originally set at 1TJ per annum in 2002 but lowered to the lesser amount in July 2007, is part of the Gas Market Moratorium designed to encourage the development of a competitive gas market in WA by preventing the government-owned enterprise from competing for the small customer market. Demand Domestic gas demand in WA is dominated by a small number of very large customers. Five large customers – Alcoa, Alinta, BHP Billiton, Burrup Fertilisers and Verve Energy – consume about 90% of WA’s domestic gas supply.565 Alcoa alone consumes about 25% of the State’s total domestic gas, and accounts for some 40% of gas supplied to the south-west of WA.566 Residential consumers account for about 4% of the WA gas market.567 Residential consumers are, however, significant ‘indirect’ gas users through electricity demand. Around 25-30 customers buy directly from just two producer groups.568 Table 10.5 provides a detailed breakdown of demand by different market segments. Table 10.5: Demand by different market segments569

Demand Groups Consumption

Manufacturing, including alumina, other non-ferrous metals, iron and steel, chemicals, glass, ceramics, cement and concrete

up to 40%

Electricity generation, baseload, mid-merit and peaking generation around 30%

Mining 20-25%

Other uses, including commercial services, transport and storage, residential gas for cooking and heating

10%

The increase in gas-powered generation plants including cogeneration units in the SWIS has resulted in significantly more gas consumed for electricity generation over the last few years. There are two unique features of demand in WA. Firstly, WA depends more heavily on gas for its primary energy need than the other States. In 2007/08, gas provided the majority of the State’s energy consumption, representing 53% (950TJ/day)570 compared to 19% Australia-wide.571 Secondly, WA’s electricity generation sector is heavily dependent on gas. Gas fuels about 60% of the State’s electricity generation.572

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10.2.2 Policy and governance There is currently no comprehensive natural gas policy produced by the WA Government that articulates how the competing interests of gas exporters and local consumers are balanced, how planning for the long-term supply of domestic natural gas should occur, and how the dependence of the economy on natural gas is managed. This may be addressed with the production of Energy 2030 – Strategic Energy Initiative. The WA domestic gas market is Australia’s largest domestic gas market. According to ABARE, Western Australia accounts for almost 40% of Australia’s total natural gas demand.573 WA consumes more gas than New South Wales, ACT and Queensland combined, and almost as much as New South Wales, Victoria and Queensland combined.574 Planning and development of gas infrastructure is principally the responsibility of the private sector owners of the infrastructure, rather than the WA Government. Historically, it has developed via a contract-based system where project developers only proceed with a multi-billion development when they can obtain firm, bankable, long-term customer contracts for large volumes of gas. These contracts reduce the risk for developers. One consequence of contracts-based development is that production is designed to meet contracted demand, resulting in the development having little excess capacity to sell on to a spot market. Unlike in the eastern Australian States, there is currently no Gas Market Bulletin Board that publishes pipeline capacity and forecasts demand and market information, and no Short Term Trading Market (as used in Victoria) that sets a daily wholesale price for natural gas. WA also does not currently have a central planning document such as the National Gas Statement of Opportunities, which is available in the eastern Australian States, and documents demand and supply data so that owners are better able to develop capital investment plans. Instead of a comprehensive gas policy, the WA gas policy environment is characterised by policies that have sought to address individual perceived market failures. Examples are the Gas Market Moratorium (discussed above) and the Gas Reservation Policy. The reservation policy requires that developers set aside the equivalent of 15% of gas from their new onshore processing projects for possible domestic gas supply, subject to commercial viability. A potential problem with this policy is that the proponent does not know if and when the 15% of gas will be purchased domestically, and unlike the other 85% of production, is unavailable for contract pre-development. While it may be contracted domestically, if there is not binding contracts in place prior to development, the project risk increases and hence increased development costs. However, the DomGas Alliance does not consider this a problem. From the DomGas Alliance’s perspective, the key difficulty with the existing policy is the lack of certainty it provides domestic gas users. Questions it asks are: Is it linked to gas production or gas reserves? When does the 15% need to be delivered, e.g. at start-up with LNG, or is it the last 15% of

reserves of a field in 40 years time, by which time resources are likely to be uneconomic to produce?

The DomGas Alliance considers that it is very easy for producers to avoid the policy by claiming domestic supply is not commercially viable. It also considers that despite claims by producers, there have been no instances of the reservation policy discouraging projects or increasing development costs.575 Over the last year, there has been some legislative reform that seeks to partially align WA with the national gas regulatory framework provided through the National Gas Law (NGL) and National Gas Rules (NGR). WA’s key gas legislation consists of:

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National Gas Access (WA) Act 2009. This Act implements the access portion of the NGL and NGR. It regulates third party access to gas pipeline systems, and covers transitional matters relating to the transition from the Gas Pipelines Access (Western Australia) Act 1998 to the Act. The Act’s main regulations are: National Gas Access (WA) (Local Provisions) Regulations 2009. These regulations

implement the Government’s policy of uniform tariffs across a gas distribution system for small use customers, and requires the regulator, when setting network access prices and tariffs, to have regard to price shocks and the impact of large increases to the fixed component of any network tariff on small use customers.

National Gas Access (WA) (Part 3) Regulations 2009. These regulations deal with a range of matters to apply national uniform provisions including providing a list of designated pipelines and the definition of a small to medium user.

Energy Coordination Act 1994. This Act provides for gas licensing, enables the Economic Regulation Authority to undertake functions in relation to gas licensing, and facilitates competition in the retail gas market through the provision of retail market arrangements, a scheme for the resolution of certain customer disputes, and a marketing code of conduct. The Code of Conduct specifies what gas companies can and cannot do when they market gas to residential and small business customers. All gas companies that market gas to residential and small business customers are required to comply with the Code.576

Gas Supply (Gas Quality Specifications) Act 2009. This Act enables gas producers to supply leaner quality gas (i.e. gas that is poor in butane-and-heavier liquids) to transmission pipelines in WA. The change aims to encourage development of gas fields that sit outside the then-current pipeline delivery specifications (WA gas specifications were narrower than the national standard),577 resulting in more gas being available. For example, the Act allows gas from BHP Billiton Petroleum’s Macedon field to be carried in pipelines. Another benefit of the broadening of the gas specification is that it will facilitate the moving of gas between the DBNGP and the Parmelia Pipeline, which impose different specifications.578 There are several consequences of this Act. Firstly, the average quality of gas may be reduced, resulting in reduced energy per unit of gas, and increased operating and maintenance costs for pipeline operators, gas storage facility operators and large gas consumers.579 Secondly, some pre-1980s gas appliances may be rendered unsafe if operated on leaner gas.580 The solutions to these consequences include requiring producers of lean gas to compensate operators and consumers for losses arising from lean gas use, and the WA Government implementing of the Appliance Rectification Program that replaces or services old appliances.581 Lean gas will not start to flow through the WA gas transmission network until after 1 July 2012 to allow time for regulations to be established and refined.582

10.2.3 Sector trends Addressing infrastructure security of supply In 2008, WA experienced two major gas supply loss incidents. They were the: January 2008 shutdown of the Karratha Gas Plant. This plant processes gas from the North

West Shelf and supplies around 63% of the State’s domestic gas requirements. An electrical fault resulted in domestic gas supply being suspended for 53 hours with a loss of 600TJ of gas. The impact was mainly limited to large gas users and it had a flow-on effect for electricity generation.583

June 2008 Varanus Island gas pipeline explosion. As a consequence of the pipeline explosion, the plant was completely shut down for two months and production only returned to full capacity (400TJ/day) 11 months later.584 The loss of the plant, which produces 33% of the State’s domestic gas production, resulted in significant economic damage to gas users.585

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These two incidents have increased the focus on security of supply. Identified infrastructure vulnerabilities are: A lack of supply diversity. There are only two significant sources of domestic gas supply – the

North West Shelf Joint Venture and Apache-led joint ventures. A lack of gas supply points. There are only two significant supply points – the North West Shelf

gas processing plant and the Varanus Island gas processing plant. Dependence on single pipelines. Two individual, unconnected pipelines – DBNGP and

Goldfields Gas Pipeline – carry the majority of the domestic gas consumed in the State. The DomGas Alliance, which represents the pipeline owners, claims that the pipelines are not a significant risk. For instance, it claims that DBNGP is well protected being underground, that any breach can be repaired within three days, that the pipeline is duplicated for much of its length providing redundancy, and a single compressor failure within a compressor block will have a negligible impact.586

Following the Varanus Island incident, the WA Government established the Gas Supply and Emergency Management Committee to advise on gas disruption emergency responses, short and long-term gas supply security, and the potential for gas storage or alternative schemes to avoid gas supply disruption. The Committee delivered its report on 3 September 2009.587 Its key recommendations were that that the WA Government should facilitate development of gas disruption contingency services in the electricity and gas markets by: Providing an incentive for electricity generators to install or retrofit dual-fuel generation capacity

and maintain an adequate strategic stock of diesel to meet abnormal fuel requirements associated with a gas supply disruption

Requiring gas retailers to have adequate back-up supply arrangements to ensure continuity of supply for small use customers on standard contacts with standard tariffs (such as residential and small business customers), and offer such back-up supply arrangements as an opt-in service for other gas distribution system customers.

The Committee identified the following options to reduce gas supply risks: Dual-fuelling of the Cockburn and Kwinana high efficiency combined cycle gas turbines as a

contingency service in the electricity market Providing additional gas storage capacity capable of withdrawal rates of between 35TJ per day

and 100TJ per day form a gas reservoir, such as the Mondarra storage reservoir, and additional interconnection of the Parmelia pipeline with the DBNGP to allow stored gas to flow into these pipelines and the WA Gas Network’s distribution system.

Improve Gas Market Arrangements including implementation of a Gas Bulletin Board, Gas Statement of Opportunities, and compulsory Short Term Trading Market.588

On 3 December 2009, the WA Government committed to implement the Committee’s recommendations.589 At the time of writing, the WA Office of Energy is coordinating the planning for this to take place. Rising prices WA gas prices have risen significantly over the last few years, after being among the lowest in the nation for many years. This low price is reflected in the wholesale prices detailed in Figure 10.2. The actual percentage increase experienced recently by large consumers is not known as this information is not publicly available. Consequently, claimed price rises are often based on a small number of new contracts that only reflect the price at a particular time, with conditions unique to the customer and supplier. What can be determined is that the prices have risen and are likely to rise further. A driver for the increased price is the rising cost of project development. This is attributed to the added costs of obtaining oil and gas from more remote areas, processing gas with lower liquid content and higher impurities, skills shortages, and increasing policy, regulatory and technical risks. While the downside of price increases is that gas consumers experience higher costs, the upside is

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that higher-cost developments now become viable, thus increasing the total amount of gas coming into the market. However, according to the DomGas Alliance, there is little evidence to show that the rising cost of project development is the major factor contributing to the rising gas price. Earlier this year, the North West Shelf Joint Venture reportedly increased the price of gas supplied to Alinta by 300% (from around $2.50 to around $8 per gigajoule). The North West Shelf is a 25 year old project with sunk investment/development costs. According to Woodside’s 2009 company results presentation, gas lifting costs (the cost of extracting gas and delivering it into the processing plant) in 2009 was $3.35 per barrel of oil equivalent or just 55 cents per gigajoule.590 Lifting costs rose from 31 cents in 2005 to 65 cents in 2008, before falling to 55 cents in 2009.591 According to the WA Energy Minister in September 2010, gas prices increase of 23% in 2009 and a rise of 7% in 2010 were essential to reflect the cost of supply.592 A current concern for WA’s large customers is the joint marketing arrangement by the North West Shelf Gas Project joint venture partners and the Gorgon Gas Project joint venture partners. In 2009 and 2010, the Australian Competition and Consumer Commission authorised the joint venture partners in both projects to jointly market and sell their individual domestic gas entitlements for supply in WA. The APPEA claims that this decision recognises that joint marketing benefits customers seeking large volumes of gas and reduces costs and risks for joint venturers, flowing through to lower gas prices and more rapid project development.593 However, large customers are strongly opposed to joint marketing arrangements. They believe that joint marketing will result in less competition and higher prices, and point to recent price outcomes involving the North West Shelf Joint Venture partners selling jointly.594 Figure 10.2: Retail gas prices for Australian States595

Uncertainty about the future availability of domestic gas There is concern over the future availability of domestic gas both in the medium term and the long term. In the medium term, the concern is that domestic demand is rising faster than new supply can be brought on-stream. If this situation arises, the result will be that gas prices will rise due to increased competition, or that industry growth will be constrained. A 2010 report by Economics Consulting Services, Western Australia Natural Gas Demand and Supply Forecast, assesses that the State will need to source at least 1,100TJ/day of new production by 2020 to meet new and replacement demand.596 The report warns that the State faces a shortfall of up to 600TJ/day in the next decade because of the lack of supply. To place this in perspective, this volume is equivalent to half of the State’s current gas consumption. Key findings include:

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Production from existing gas fields supplying the WA market is expected to decline, by as much as two-thirds by 2020.597

The North West Shelf Gas fields have been in production for over 25 years. These fields currently supply around 70% of the WA market. The majority of the largest fields are in decline.

The State would need to source at least 1,100TJ/day of new gas to meet new growth in demand, and to replace existing supply sources as fields decline and contracts expire.

Between 500 and 700TJ/day of new production would be needed just to maintain existing consumption without taking into account any growth in demand.

New projects such as Reindeer, Macedon and Gorgon would only provide up to 500TJ/day of new supply. While other projects have been identified, they have either yet to be proven to be commercial, or there is uncertainty over domestic supply commitments.

The State therefore faces a potential shortfall of up to 600TJ/day between expected supply and demand in the next decade. The report identified over 40 new resource projects in Western Australia that potentially need gas supply. Together, these projects could deliver $46 billion in new capital investment, $25 billion a year in economic output and employ 19,000 people. Figure 10.3 shows that the forecast gas supply and Department of Mines and Petroleum’s consumption levels suggests that for virtually all of the next decade, consumption exceeds the expected supply. Figure 10.3: WA demand and supply forecast to 2020*598

* These projections should be read in conjunction with the underlying price expectations as these effect demand and supply.

Figure 10.4 illustrates the potential gas shortfall. However, the APPEA argues that in the medium term, gas supplies will be adequate. This is because WA domestic gas production capacity will increase by over 20% (220TJ/d) around the end of 2011 when the Devil Creek Development Project is commissioned by Apache Energy. It will increase by another 150TJ/d when Gorgon Project’s domestic gas plant is completed. This plant is planned to expand to 300TJ/d by 2020. Other potential projects are: BHP Billiton and Apache Energy proposed development of the Macedon gas field with

production commencing in early 2013, with a proposed production capacity of 200TJ/d Chevron Australia proposed development of a domestic gas plant in the Wheatstone project

with a capacity of 200TJ/d, commencing production in 2016.599

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Figure 10.4: Potential domestic gas shortfall in 2015 and 2020*600

* These projections should be read in conjunction with the underlying price expectations as these effect demand and supply.

These and other projects have the potential to double WA’s domestic gas supply within 10 years according to the APPEA. However, this will only occur if there sufficient customer demand as reflected in firm contract commitments. If the level of growth in demand conforms to the long-term average growth of 2.9%, then supply should easily meet demand. However, if growth in demand is much larger, then there may be a mismatch between demand and supply. Other factors that will affect domestic growth in demand include gas prices, incentives to increase fuel diversity, implementation of a carbon pricing regime, and mandatory energy performance requirements. In the long term, the Domgas Alliance’s concern is that due to the massive LNG exports, WA’s gas reserves will be depleted resulting in WA consumers not having access to domestically-produced gas. To support this, the DomGas Alliance argues that gas resources in the Carnarvon Basin that supply the bulk of the domestic market could be depleted within 30 years.601 The APPEA argues that WA’s viable reserves will increase considerably, especially if the price of gas rises, ensuring that WA domestic gas markets will have access to gas for the foreseeable future.

10.3 Performance

10.3.1 Transmission pipelines There is very little public information available on the operational performance of transmission networks. Even if there was, it is extremely difficult to develop meaningful comparative performance measures for transmission pipelines as each is unique in terms of its distance, diameter, age and condition, operational characteristics such as number of compressors, receipt points and delivery points, the market serviced and the environment through which the pipeline passes. One performance measure that provides an indication on the adequacy of the infrastructure is its ability to provide additional gas and its reliability. Currently, the DBNGP is constrained because capacity on the pipeline has been fully contracted.602 The Parmelia Pipeline has unused capacity.603 There is approximately 4TJ/d of spare capacity available for the covered tranche of the Goldfields Gas Pipeline and several non-covered elements are undergoing expansion in line with demand.604 The reliability of the DBNGP and Goldfields Gas Pipeline has historically been very high.

10.3.2 Distribution networks There is considerable performance information on gas distributor networks as the Economic Regulation Authority produces a yearly report on them. However, assessment of this information needs to consider multi-year trends rather than single years. Two key factors in assessing the

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quality of a distribution network are reliability and network integrity. Reliability is measured in terms of the average frequency and duration of supply interruptions, which can be either planned or unplanned. Planned interruptions occur when a supply is deliberately disconnected to undertake maintenance or construction work. Unplanned interruptions mainly occur because of leakages or damaged pipes requiring immediate repair. Unplanned outages are often caused by third parties damaging pipes. Key reliability measures are: System Average Interruption Duration Index (SAIDI). SAIDI measures the total minutes, on

average, that a customer could expect to be without gas over the reporting period. Total SAIDI comprises both planned and unplanned minutes-off-supply.

System Average Interruption Frequency Index (SAIFI). SAIFI measures the number of occasions per year when each customer could, on average, expect to experience an interruption. It is calculated as the total number of customer interruptions, divided by the total number of connected customers averaged over the reporting period.605

Planned interruptions are mainly due to mains replacements. Unplanned interruptions are due to third party damage, infrastructure failure and unplanned maintenance. Table 10.6 lists the overall and normalised SAIDI performance. In 2008/09, only WAGN sustained interruptions on their networks. The SAIDI performance was significantly better than the year before. WAGN have stated that the majority of its supply interruptions on their networks were the result of third party damage to their infrastructure, which is reflected in the normalised SAIDI being much lower than the overall SAIDI.606 WAGN implements third party prevention programmes such as targeting repeat offenders to reduce damage to its assets Table 10.6: Gas distribution network SAIDI607

Licensee Average Interruption Duration (minutes per annum)

2007/08* 2008/09*

Overall Normalised Overall Normalised

WAGN** 26.8 Not Provided 1.148 0.034

Esperance power station 0 0 0 0

Wesfarmers Kleenheat 3,060 120 0 0 * In 2007/08, 94% of Wesfarmers Kleenheat’s Overall SAIDI was due to a single outage of 2880 minutes caused by factors beyond their control. ** Prior to 2007/08, WAGN calculated SAIDI in seconds for unplanned activities only. The 2008/09 SAIDI is in minutes, which include planned and unplanned activities based on ERA requirements.

Table 10.7 lists the overall and normalised SAIFI performance. It shows that the duration of interruption was very low or zero across the networks Table 10.7: Gas distribution network SAIFI608

Licensee Average Interruption Duration (minutes per annum)

2007/08* 2008/09*

Overall Normalised Overall Normalised

WAGN 0.5 Not Provided 0.006 0.001

Esperance power station 0 0 0 0

Wesfarmers Kleenheat 4* 2 0 0 * The 2007/08 SAIFI was per 1000 customers for unplanned activities only. The 2008/09 SAIFI is per customer for planned and unplanned activities (WAGN).

Unaccounted-for gas (UAFG) is a measure of the difference between the gas entering the system and the amount delivered. This difference indicates how much of the gas injected into the network is lost in transit. This can be due to system leaks, theft, inaccurate meters, differences in times that meters are read, accounting errors, gas compressibility factors, temperature or heating value discrepancies, line pack differences, and losses in commissioning of new or replacement pipes.

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The National Greenhouse and Energy Reporting (Measurement) Technical Guidelines (2008) assert that 55% of UAFG is attributable to leakage with the rest being metering errors. Table 10.8 identifies the UAFG for the networks. Compared nationally, the UAFG figures are low. Table 10.8: Gas distribution network UAFG609

Licensee 2007/08 2008/09

Total gas consumed (GJ)

Unaccounted-for gas (%)

Total gas consumed (GJ)

Unaccounted-for gas (%)

WAGN 29,257,607 2.8 27,976,970 3.1

Wesfarmers Kleenheat 21,971 1.8 24,722 1.4

Esperance power station 20,257 0.0 21,682 0.0

The above performance measures indicate that WA’s gas distribution networks are in good condition compared with interstate gas systems.

10.3.3 Environmental sustainability Natural gas as an energy source has significant environmental benefits compared to electricity generated from coal. For example, black coal used in producing electricity generates 80% more carbon dioxide emissions than natural gas used in a gas combined cycle gas turbine.610 If there is a continuing use on liquid fuels or coal for energy, rather than natural gas, there will be negative environmental consequences. Gas companies have also sought to minimise the risks of their operations, and in particular to reduce their environmental risk. Examples of this include: Minimising ground disturbance by using common trenching with other utilities, and directional

boring to prevent damage to the root systems of trees Using long-life materials to minimise the need for future maintenance activities Minimising line purging operations and if necessary, using flaring to minimise the

environmental impact.

10.4 Future challenges The challenges to achieving improvements in gas infrastructure are: Managing the risk of loss of supply. Given the vulnerabilities in gas production and

transmission infrastructure, loss of supply is a major risk that needs to be continually monitored.

Developing a long-term gas policy with a supportive regulatory framework. The WA Government needs to determine how natural gas will continue to be supplied with prices and volumes determined within a competitive market. Its decisions need to balance the importance of the interrelationships between gas and alternative fuels, the need to manage the risk of gas shortages and the need to provide gas domestically at an appropriate price. This is a challenge, as the WA gas market is experiencing the pressures associated with future gas availability and the need to encourage future project developments. Peculiarities of the WA market include two supplier groups that dominate supply; the vast majority of domestic gas passes through two supply points and two pipelines; five very large gas customers that consume about 90% of WA domestic gas supply although there are 25-30 customers that purchase directly from suppliers;611 r and WA does not currently have a formalised secondary gas trading market.

r The DomGas Alliance claim the downstream market is highly competitive with around 25-30 customers buying gas directly from producers. DomGas Alliance, 2009, Western Australia’s Domestic Gas Security: Report by the DomGas Alliance, p. 57.

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Encouraging investment in production and transmission without requiring firm contracts being signed. Due to the contracts-based development of WA’s production and transmission infrastructure (i.e. consumers underwriting capacity prior to the construction project commencing), incremental demand is difficult to accommodate. Measures such as a Gas Bulletin Board and a Statement of Opportunities may assist in encouraging the development of infrastructure to meet incremental demand, not driven by new, large-scale projects that consume large volumes of gas. Realistic rates of return on capital that reflect the risks commensurate prevailing conditions in the market for funds and the risks involved in providing services also have to be available to investors in infrastructure.

Expanding the distribution networks. WA’s domestic gas infrastructure was created to deliver gas to a small number of large consumers, and, consequently, the distribution network evolved as an adjunct to this. It has limited capacity to supply new small industrial customers, and therefore gas is not available in certain areas. Expanding the gas distribution network to non-served areas is challenging due to the cost of infrastructure provision and uncertainty of demand, however, the benefit of this includes facilitating economic development and increasing energy supply diversity.

10.5 Report Card Rating

Infrastructure Type WA 2010 WA 2005 National 2005 National 2001

Gas C+ B+ C+ C

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s gas infrastructure has been rated C+. This rating recognises that WA is fortunate in having significant gas reserves and has efficient gas transmission pipelines that have expanded in line with demand from large customers. However, the single points of failure in production and transmission infrastructure are a major concern, as is the lack of a long-term gas policy with a supportive regulatory framework that can deliver infrastructure to meet the rapidly evolving gas demand in WA. Positives that have contributed to the rating are: Existing high quality, transmission pipelines Good network integrity, reliability and safety of distribution networks Increased exploration and development of gas reserves Expansion in capacity of DBNGP.

Negatives that have contributed to the rating are: Production and transmission vulnerabilities Immature gas market dominated by a small number of gas producers and consumers Uncertain domestic gas policy and regulatory environment Limited access for industry development away from pipelines Uncertainty about the operation and impact of the domestic gas guarantee.

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TELECOMMUNICATIONS

11.1 Summary

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Telecommunications C- Not rated Not rated B

This rating recognises that the PSTN network is of a good standard for telephony, but has major limitations in providing data services as seen in the significant broadband blackspots in metropolitan Perth, and very limited availability in non-metropolitan areas. Mobile phone coverage in larger urban areas across the State is adequate, however, there is a lack of coverage outside major regional centres and, critically, along major highways. In addition, there is a lack of competitive infrastructure for mobile phone networks outside major centres. Backhaul is adequate to metropolitan areas but is failing to provide the level of services required in other areas of the State. In 2007, Engineers Australia rated telecommunications in the Telecommunications Infrastructure Report Card 2007. It used Local Government Statistical Divisions as the geographical basis for rating fixed and mobile infrastructure. Below are its ratings.

Statistical Division Name Fixed Infrastructure Rankings (2007)

Mobile Infrastructure Rankings (2007)

Perth C C

South West F D

Lower Great Southern F E

Upper Great Southern F E

Midlands F E

South Eastern F E

Central F E

Pilbara F E

Kimberley F F

Developments since the 2007 Telecommunications Infrastructure Report Card have included: Decline in quality of telecommunication services due to increase in congestion Small increase in the provision of telecommunication infrastructure Small increase in the construction of backhaul fibre and microwave links Increased demand for high speed broadband services Continual growth in mobile phone ownership and demand for mobile phone data services Increased capability of mobile telephone networks including increases in coverage, reliability,

function and capacity Significant demand for ADSL in Perth unable to be met due to infrastructure constraints in

about 25% of the metropolitan area A number of major infrastructure projects about to commence or under consideration such as

Backhaul Blackspots Initiative projects The cancellation of the State-wide Broadband Network (SBN) Commercial introduction of a 4G mobile wireless network.

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Major in-progress infrastructure projects include: The Australian Government’s National Broadband Network (NBN) three trial sites in WA –

Victoria Park in Perth, Geraldton and Mandurah Greenfield housing developments incorporating fibre to the home Expansion of the government-wide IP network.

Challenges to improving telecommunications infrastructure include: Addressing the significant disparity between rural and metropolitan users Creating consumer/business demand for high speed broadband connection Selecting optimal technologies Strengthening the resilience of the telecommunications backbone Capitalising on smart network roll-out Implementing the NBN Making 4G spectrum available.

11.2 Infrastructure overview

11.2.1 System description WA’s telecommunications infrastructure consists of infrastructure that delivers customer access networks (CAN) and backhaul transmission networks. The key elements rated in this section are: Fixed line CAN infrastructure Mobile CAN infrastructure Backhaul infrastructure.

The provision of telecommunications services operates within a market structure comprised of: Carriers. The owner of a network used to supply carriage services to the public. Carriage service providers. The organisations that use a carrier service to supply

telecommunications services to the public using a carrier-owned network. Internet service providers (ISPs) are carriage service providers.

Content service providers. The organisations that supply radio and TV broadcasting and on-line services to the public.

This section does not address content service provision or private telecommunication systems that have no impact on public telecommunications. Table 11.1 lists the infrastructure that this section assesses. Table 11.1: Infrastructure assessed in the Report Card612

Type Purpose Technologies

Customer Access Network (CAN) • Fixed line • Mobile • Fixed wireless

Connects customer to an aggregation point

• Copper twisted pairs • DSL Access Multiplexers (using twisted pairs,

possibly in the form of line sharing service (LSS) or unconditioned local loop service (ULLS))

• Coaxial access part of hybrid fibre-coaxial (cable TV) systems

• Access fibre networks (fibre to the premises/home)

• Cellular 2G, 2.5G, 3G and 4G mobile networks • WiMAX technologies

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Type Purpose Technologies

Backhaul Connects aggregation points to major nodes in capital cities or regional centres, and provides high-capacity links between capital cities, or from regional centres to capital cities

• Transmission fibre • Fibre trunks • Microwave links • Satellite links

Fixed line CAN infrastructure The fixed line CAN represents the link between the telephone exchange and the customer. Fixed line infrastructure includes twisted pair copper wire, and fibre to the home/premises, and it provides telephony, data transfer and internet connections. Copper wire has been the standard medium for connecting fixed line services to end-user premises, but this is being replaced with optical fibre. The fixed line CAN owner in WA is Telstra. Mobile CAN infrastructure Mobile CAN infrastructure provides mobile telephone, data and multimedia services to mobile handsets. There are four mobile carriers operating in WA. These networks use either 2G/2.5G or 3G services. 2G/2.5G (henceforth known as GSM) networks in WA are operated by: Telstra Optus Vodafone.

3G networks in WA are operated by: Telstra’s Next G Network Hutchinson ‘3’ (Hutchinson/Telstra network) Optus/Vodafone (shared network).

In 2010, vividwireless commenced offering a 4G wireless broadband service. The GSM networks were primarily designed for voice services, but are capable of supporting data services at a lower rate than 3G networks. The 3G network allows much higher data transfer rates than the GSM networks, allowing consumers to access a wider range of applications. The 3G technology allows carriers to offer a wider range of service to consumers and achieve a more efficient use of spectrum that allows for greater network capacity. 3G networks provide access to data and the internet through either a mobile handset or a data card that is inserted into a computer. The 3G networks can be upgraded to provide peak download speeds of up to 42Mbps and upload speeds of up to 5.8Mbps.613 s However, it should be noted that mobile broadband capacity is typically shared among multiple simultaneous users and is therefore subject to contention. Figure 11.1 shows that the growth in the number of mobile phones has been substantial over the last decade. The number of mobile phones has exceeded the number of fixed line phones since 2000.

s The ACCC has recently expressed concern about coverage and speed claims made by internet and mobile phone providers. See for example, Broadband Internet speed claims and the Trade Practices Act—Information paper, 2007 www.accc.gov.au/content/index.phtml/itemId/779405 and ACCC Media release, MR 328/07, December 2007.

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4G mobile wireless In 2010, vividwireless commenced offering a 4G wireless broadband service, the first 4G public service in the State. vividwireless’ Perth network is made up of 150 WiMAX base stations. Its footprint covers the majority of the Perth metropolitan area, but there are several blackspots, including some sections of Shenton Park and Carlisle.621 The 4G mobile telephone services have a number of new features compared to the third and second generation mobile telephone systems. These new features are useful for controlling mobile equipment such trucks, trains stackers and reclaimers. Many mining companies are looking for ways to improve productivity and automation of mobile plant offers a number of ways to achieve these goals. The new 4G systems efficiently provide the data and video communications between the equipment and the mobile base station to ensure that the required safety and operational conditions are satisfied. At present mining companies are having to negotiate with telecom carriers to get spectrum due to the lack of spectrum allocated for non telecom services. Due to the high cost of connecting rural mobile telephone base stations to Perth there has not been much demand for 4G spectrum in rural areas. Hence only a small amount of spectrum has been made available for sale. With the advent of government and private investment in backhaul fibre networks, there has been a significant decrease in the cost of connecting rural mobile telephone base stations to Perth. More rural mobile base stations are now being installed and there is an increase in demand for spectrum in the rural areas. The increase in the number of base stations means that mobile users now have better coverage from a wider choice of suppliers. Backhaul infrastructure Backhaul infrastructure connects telecommunication aggregation points to major nodes in capital cities or regional centres, and provides high-capacity links between capital cities, or from regional centres to capital cities. Backhaul is provided by fibre or microwave technologies, and while fibre-based infrastructure provides the highest bandwidth, its construction is more capital intensive. Within the Perth CBD, a number of companies offer fibre backhaul capacity, which has led to considerable competition. Some of the outer metropolitan areas are serviced through microwave backhaul due to affordability issues surrounding fibre backhaul, with those on the major infrastructure links (i.e. transport and energy corridors) being serviced by fibre. Most of WA’s regional areas are linked only by Telstra’s backhaul transmission. In some areas there are alternative backhaul microwave networks. There are a number of fibre networks that are not available commercially due to a lack of optic fibre breakout points that could be used to provide network access. The cost of providing alternative backhaul services to many areas of regional WA prevents investment in these locations and maintains Telstra’s market dominance. There are four interstate backhaul fibre cables connecting Western Australia to the rest of Australia. Two of these cables are owned by Telstra, with Optus and NextGen operating one each. All of the backhaul cables terminate in Perth without any access points apart from the NextGen cable that has an access point located at Kalgoorlie.622 Vodafone Hutchison Australia is currently undertaking a national upgrade to their mobile backhaul network, including significant expansion in WA.

11.2.2 Policy and governance The Australian Government’s strategic vision for telecommunications reflects that while telecommunications can be an enormous contributor to the economy and to the lifestyle, health and safety of the community, provision and innovation are primarily driven by market forces. The WA Government, in its 2004 State Communications Policy entitled WA – a connected community, has

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outlined the State’s priorities of pursuing opportunities to access Australian Government funding for telecommunications enhancement, with particular attention being given to regional areas that cannot gain appropriate services through market forces.623 This document was developed by the Department of Industry and Resources and outlines the Government’s objectives to ensure that Western Australians have access to functional and affordable communications services. Key national priorities, as defined in the Australia’s Digital Economy: Future Directions paper (2009), are to address Australia’s lower take-up rate of internet use and business adoption of e-commerce compared to international peers, provide national broadband infrastructure via the NBN, free up spectrum by the switchover to digital television, reallocation/renewal of licenses for various spectrum bands, and refining Australia’s communications framework.624 Australia’s telecommunications industry is subject to a regulatory framework defined by the Telecommunications Act 1997. Its core aim is to promote the long-term interests of end-users of telecommunications services. The framework relies on industry self-regulation to develop codes and standards in all areas that apply to the sector. However, Government regulators have powers to intervene if industry self-regulation is not working effectively in specific instances. The key types of framework documents developed under self-regulation are: Industry Codes, which are rules or guidelines governing particular aspects of

telecommunications, developed by industry Industry Standards, which are rules or guidelines similar to industry codes, but determined by

the Australian Communications and Media Authority (ACMA) Technical Standards that cover the technical parameters of customer equipment, such as

cables and networks.625 Two other key elements of the regulatory framework are the: Telecommunications (Consumer Protections and Service Standards) Act 1999, which

legislates a number of consumer protection matters, particularly the Universal Service Regime, the National Relay Service, and continued access to untimed local calls

Trade Practices Act 1974, which includes two telecommunications-specific parts, Parts XIB and XIC, covering anti-competitive conduct provisions and a telecommunications-specific access regime respectively.t

The radio spectrum framework is defined in the Radiocommunications Act 1992 that sets out the tools to manage the spectrum including frequency planning, licensing and technical standards. In September 2009, the Australian Government announced that it would be making major telecommunication reforms, as it stated that the existing telecommunications anti-competitive conduct and access regimes were cumbersome and provide insufficient certainty for investment.626 The proposed reforms involved: A structural separation of Telstra that primarily involves separating the network

operations/wholesale functions from the retail functions Streamlining the competition regime to provide more certain and quicker outcomes for

telecommunications companies Strengthening consumer safeguards, notably the Universal Service obligation, Customer

Service Guarantee and Priority Assistance Removing redundant and inefficient regulatory red tape.627

The Commonwealth Telecommunications Act 1997 exempts low-impact and certain other telecommunications facilities from most planning requirements under State legislation.628 However,

t The access rules under this legislation provide a framework for determining the services to which content service providers have a right to access for the purpose of providing their own competing services, and the cost at which such services will be provided to them.

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for other facilities, State and local government planning schemes apply. In 2004, Planning WA produced a State Planning Policy to assist in preparation, assessment and determination of applications for planning approval of telecommunications facilities within the context of the planning system of WA. A supporting document, Guidelines for the Location, Siting and Design of Telecommunications Infrastructure, provides advice on the location, siting and design of telecommunications infrastructure to assist local government in planning for telecommunications facilities at the local level.629 Key multi-jurisdictional bodies and government agencies are: Department of Commerce (WA Government). The Department's Science, Innovation and

Business Division plays a role in providing broadband infrastructure to regionally based projects including enhanced medical and emergency communications infrastructure and upgrades to Indigenous communities. It is also responsible for liaising with the Australian Government in a bid to secure further broadband funding and determine the State’s contribution and requirements.

Department of Broadband, Communications and the Digital Economy (DBCDE) (Australian Government). The DBCDE has a leading role in outlining the strategic direction of the telecommunications sector, and providing advice on all regulatory policy aspects of the telecommunications and radiocommunications sectors. Its Telecommunications Industry Division also provides advice on legislative and administrative arrangements for Telstra and Australia Post.

Australian Communications and Media Authority (ACMA) (Australian Government). ACMA is a regulator of the Australian communications industry, with specific responsibilities for the regulation of broadcasting, the internet, radiocommunications, and telecommunications consumer and technical matters.

Australian Competition and Consumer Commission (ACCC) (Australian Government). The ACCC regulates competition in the telecommunications industry with specific responsibilities for the administration of regulation of anti-competitive conduct, and the approval and arbitration of access codes developed by the industry.

Telecommunications Industry Ombudsman (TIO) (Australian Government). The TIO provides an independent dispute resolution forum for complaints made by residential and small business consumers of telecommunications services. The TIO is funded through charges levied on carriers and service providers on the basis of complaints received against them.

Communications Alliance Ltd. The Communications Alliance is the peak communications industry body and has primary responsibility for developing technical, operational and consumer industry codes and standards for the industry.630

The WA Government agency responsible for the State’s telecommunications policy and initiatives is the Department of Commerce.

11.2.3 Sector trends Growth in 4G demand 4G services can provide advanced digital mobile broadband communications that support a range of data intensive activities such as live video, imaging, biotelemetry, and peer-to-peer voice and data traffic. As such, it is attractive to wireless broadband and mobile phone providers. It will also be ideal for the remote controlling of trains and mining operations. The success of both of these uses will be dependent on having adequate backhaul.

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Growth in internet connections The number of WA consumers with internet connections continues to rise, as seen in Figure 11.5. The graph illustrates that in the past year, growth has slowed, which may indicate that the market is reaching saturation given the current price and quality packages. However, the number of consumers is likely to rise as services become available in unserved areas and the roll-out of the NBN commences. Figure 11.5: Total ISP subscriptions in WA631

Some 41% of WA residents have an ISP subscription, which is above the national average of 38%, as seen in Table 11.2. Table 11.2: Percentage of population with ISP subscriptions, June 2009

State Population (thousands)632

People with ISP subscriptions (thousands)633

Proportion of population with ISP subscriptions

New South Wales 7,099.7 2,713 38%

Victoria 5,427.7 1,952 36%

Queensland 4,406.8 1,746 40%

South Australia 1,622.7 584 36%

Western Australia 2,236.9 919 41%

Tasmania 502.6 182 36%

Northern Territory 224.8 83 37%

Australian Capital Territory 351.2 241 69%

Australia 21,874.9 8,420 38%

The availability of reasonably priced fourth generation (4G) cellular and wireless telecommunication technology and the roll-out of the NBN are expected to accelerate this. In May 2010, Telstra commenced a trial of Long Term Evolution (LTE), a 4G technology, to assess its capability and performance as the next evolution of the Next G network. Based on the trial, Telstra will spend the next three to six months testing the feasibility and technical capability of LTE for future commercialisation.634 Roll-out of Australian Government broadband infrastructure In response to the increasing demand for high-speed broadband services, and the need to provide broadband services in regional and other areas with limited access, the Australian Government has initiated a number of projects to develop broadband networks. National Broadband Network In early 2009, the Australian Government announced that it would be building the National Broadband Network (NBN). The NBN aims to connect 93% of Australian homes, schools and

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workplaces with 100Mbps broadband services through fibre-to-the-premises (FTTP) connections. The remaining 7% will be provided with 12Mbps next generation wireless and satellite broadband services. The network will be built and operated by NBN Co, which was established by the Australian Government for the project. Investment in the company will, according to preliminary estimates, total up to $43 billion over eight years. Funding for the company will come primarily from the Australian Government through the Building Australia Fund, which will be the majority shareholder. The Australian Government expects private sector investment in the company through the issuing of Aussie Infrastructure Bonds (AIBs). The Australian Government intends to sell its interest in the company after the network is built and fully operational. The Australian Government claims that the NBN will lead to a significant reform in the telecommunication industry as it will create a complete separation between the infrastructure provider and retail service providers. This separation is expected to lead to greater retail competition and lower prices. In July 2010, three sites in WA were announced as among the second release sites for the NBN roll-out. No WA sites were named in the first release. Victoria Park in Perth, Geraldton and Mandurah will each have the network rolled out alongside approximately 3,000 premises, with construction beginning in the second quarter of 2011. These sites are displayed in Figure 11.6.635 Figure 11.6: Initial NBN roll-out sites in WA636

Backhaul Blackspots Initiative To immediately enhance broadband access in regional Australia, the Australian Government announced the Backhaul Blackspots Initiative in April 2009. This program provides $250 million to be used to immediately address ‘backbone blackspots’ in regional Australia. In June 2009, the Australian Government announced that Geraldton had been named as one of six initial locations in the first round of the program. The contract for the initiative was awarded by the DBCDE to Nextgen Networks in December 2009 and was announced as part of the first building blocks of the National Broadband Network.637 This project is displayed in Figure 11.7 and was started in May 2010.

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Figure 11.7: Regional Backbone Blackspot Project in WA638

Fibre in greenfield estates The Australian Government has announced that as part of the NBN all greenfield developments that receive planning approval after 1 January 2011 will require fibre-to-the-premises infrastructure. This initiative is designed to ensure that homes built in new developments or major redevelopments are connected via fibre infrastructure. In December 2009, the Australian Government released an exposure draft of a bill to implement the changes.u StateWide Broadband Network In April 2009, the Western Australian Government cancelled the proposed StateWide Broadband Network (SBN) citing viability issues and the expectation that the NBN would supersede the initiative.

11.3 Performance Assessing the level of service and asset quality of telecommunications infrastructure requires evaluating not only infrastructure issues, such as coverage and capacity, but also market issues such as pricing and access offered. While some of this information is publically available, much of it is commercially sensitive and not published by the telecommunication owners and providers.

11.3.1 Fixed line CAN infrastructure performance Fixed line telephone provision is universal as it is a requirement for Telstra, under the Australian Government’s Universal Service Obligation (USO), to ensure that standard telephone services are reasonably accessible to all people in Australia on an equitable basis.v The cost of supplying loss-making services that are required to fulfil the USO is shared among all carriers. Given the almost universal provision of fixed line infrastructure, a key performance indicator is customer satisfaction with the service. A 2008 Australia-wide survey found that over 80% of both metropolitan and non-metropolitan customers stated that their fixed line phone services met or exceeded their expectations. Only 6% of customers in metropolitan areas and 5% in non-metropolitan areas stated that local call services rarely met their expectations.639 While there is no public information on the views of WA consumers, it is likely that it will be similar. Much of the copper network is old, but still fit for its purpose in terms of providing telephone services, but is inadequate for data services.

u The proposed Act is called Telecommunications Legislation Amendment (Fibre Deployment) Act 2010. Department of Broadband, Communications and the Digital Economy, Fibre in Greenfields Estate webpage, http://www.dbcde.gov.au/broadband/national_broadband_network/fibre_in_greenfield_estates, accessed 4 January 2010. v The details of Telstra’s fulfilling its obligations as universal service provider is contained in the Telstra policy statement and marketing plan approved by ACMA. These are available from http://www.telstra.com.au/abouttelstra/commitments/uso.cfm.

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Broadband level of service and asset quality is far more variable due to the economics of providing backhaul and broadband access services, and the technologies used. ADSL technology provides the majority of broadband connections and uses Telstra’s copper phone network to provide the connection between the exchange and the home. While theoretically all homes with phone lines can access ADSL, due to limitations with the exchanges and phone lines, this is not always possible. For example, as of June 2010 in WA, of Telstra’s 860 ADSL-enabled exchanges, some 92 had no ports available for ADSL services and three had no ports for ADSL2+ Services, meaning that no additional ADSL customers can be served.640 And even if ports are available at the exchange for connections, customers still may not be able to access ADSL because they are: Located too far from an exchange, because the quality of ADSL decreases with distance Have a technology problem, such as having a large pair gain system (LPGS) already on their

line, which results in no additional capacity being available, or suffering from external interference.641

Figure 11.8 shows the physical ADSL-enabled exchanges in WA.

Figure 11.8: ADSL-enabled status of Telstra’s exchanges in WA642

Upgrading of exchanges is continuously occurring and details of the availability of ADSL ports in exchanges and by CMUX are available from Telstra Wholesale at http://telstrawholesale.com/products/data/adsl-reports-plans.htm and on ADSl2exchanges.com.au under the RIM section

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11.3.2 Mobile CAN infrastructure performance The coverage provided by 3G and GSM networks is extensive in populated areas as seen by the coverage maps of the three networks on the following pages. None of the mobile phone carriers state the percentage of the population that their system covers in WA. Despite the wide coverage, the State continues to experience blackspots along regional highways and at small population centres. The asset quality of the mobile phone infrastructure is generally good due to its young age, and its capacity continues to increase in line with demand. People who live beyond 3G or GSM terrestrial mobile coverage can obtain a subsidised satellite phone under the Australian Government’s Satellite Phone Subsidy Scheme. Some 5,158 people living in WA took up the subsidy between 2002 and 2009, which equates to 32.6% of the national figure, more than any other State.643 To address mobile phone blackspots in regional areas, the WA Government announced a $40 million program in September 2010.644 Figure 11.9 shows Telstra’s 3G and GSM network coverage map. Figure 11.9: Telstra’s 3G and GSM network coverage map, June 2010645

Figure 11.10 shows Optus’ 3G and GSM network coverage map.

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Figure 11.10: Optus’ 3G and GSM network coverage map, June 2010646

Figure 11.11 shows Vodafone’s 3G and GSM network coverage map.

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Figure 11.11: Vodafone’s 3G and GSM network coverage map, March 2010647

Mobile phone services attract the majority of service complaints compared to fixed line and broadband services. A measure of customer satisfaction for fixed line, mobile and broadband, based on complaints, is provided by the Telecommunications Industry Ombudsman. It records the number of complaints for telecommunications services. The main areas of concern are billing and payment. The highest increase in complaints was among mobile phone users (79% rise), followed by internet (57%), landline (40%) and mobile premium services (13%). Figure 11.12 identifies the nature and location of complaints to the Ombudsman in Perth.

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11.3.3 Backhaul infrastructure The WA Government has identified that the lack of competitive backhaul has impeded the uptake of broadband. This is because providers in areas served by a single backhaul connection can exploit their monopoly position. The backhaul infrastructure in a vast majority of regions in WA consists of only one primary fibre cable. These can be cut, typically accidentally by a backhoe, which can result in a loss of most telecommunications access for many hours while the cable is repaired. The other major problem with single fibre links is that there is a lack of competition, resulting in high broadband prices. The WA Government has identified an order of priority locations in the State that are lacking an alternative backhaul transmission network. These identified areas are: The areas north-west of Perth, comprising parts of the Wheatbelt, mid-west, Gascoyne, Pilbara

and Kimberley regions The areas east of Perth, comprising parts of the Wheatbelt and Goldfields-Esperance Regions The areas south-west of Perth, comprising Peel, South West, Great Southern regions and

parts of the Goldfields-Esperance region.650

11.4 Future challenges The challenges to achieving improvements in telecommunications infrastructure in WA are: Addressing the significant disparity between rural and metropolitan users. Much of the

non-urban population in WA cannot access telecommunication services that are common in urban areas. This is because it has not been commercially viable for the privately owned telecommunications companies to do so. And even in areas where services are available, they are often expensive due to the lack of competition. While the NBN will increase the availability of broadband, it will not increase the availability of mobile phone coverage.

Creating consumer/business demand for high speed broadband connection. The NBN aims to provide universal high speed broadband access, and it is claimed that this will deliver significant improvements in business efficiency and innovation, and quality of life improvements. However, while there is no doubt that its huge capabilities and universal access will be welcome, the cost of the NBN will be significant. Thus, a challenge facing the NBN will be in creating (over the medium term) large enough numbers of suppliers and consumers of services and products running over the network to make the infrastructure investment justified.

Selecting optimal technologies. There are many technologies that telecommunications companies can deploy. All have tradeoffs in areas such as cost, risk, capability and compatibility. The selection of technologies is critical to prevent stranding of assets, particularly for smaller telecommunication companies that do not dominate the market, and for those wishing to be compatible with the NBN.

Strengthening the resilience of the telecommunications backbone. The telecommunications network has become an essential service and its loss causes significant economic and social consequences. As telecommunications become embedded into more aspects of commercial and everyday life, ensuring its resilience and robustness becomes increasingly important. This requires reducing single points of failure and other vulnerabilities, and preventing accidental disruptions such as by cutting through cables with a backhoe.

Capitalising on smart network roll-out. Smart networks are being rolled out by electricity and transport infrastructure organisations. These all rely on telecommunications. If there are opportunities to capitalise on the roll-outs to improve the provision of telecommunication services to under-served areas, these developments should be capitalised on.

Implementing the NBN. The NBN roll-out across Australia will have a significant impact on other telecommunication service providers. Consequently, this is causing uncertainty leading to delays in investment decisions by other telecommunication providers.

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11.5 Report Card Rating

Infrastructure type WA 2010 WA 2005 National 2005 National 2001

Telecommunications C- Not rated Not rated B

Based on considerations of planning, funding, and infrastructure capacity and condition, WA’s telecommunications infrastructure has been rated C-. This rating recognises that the PSTN network is of a good standard for telephony, but has major limitations in providing data services as seen in the significant broadband blackspots in metropolitan Perth and very limited availability in non-metropolitan areas. Mobile phone coverage in larger urban areas across the State is adequate, however, there is a lack of coverage outside major regional centres, and critically along major highways. In addition, there is a lack of competitive infrastructure for mobile phone networks outside major centres. Backhaul is adequate to metropolitan areas, but is failing to provide the level of services required in other areas of the State. Positives that have contributed to the rating are: Reasonable standard of the PSTN Incremental improvements in telecommunications coverage, capability and pricing across the

State Roll-out of blackspot programs and the NBN trial sites.

Negatives that have contributed to the rating are: Broadband blackspots in metropolitan areas and very restricted broadband availability in

regional areas Inadequate competitive backhaul to regional areas Lack of mobile phone coverage along some highways Very limited telecommunications infrastructure for areas outside of Perth Uncertainty surrounding the commitment, implementation and financial viability of the NBN.

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APPENDICES

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Appendix A: Rating methodology

The rating methodology is designed to provide a standardised approach to developing evidence-based rating of infrastructure that is credible, defendable, and explainable. The Report Card’s rating scheme is predicated on the principle that infrastructure policy, regulation, planning, provision, operation and maintenance are optimal if the infrastructure meets the current and future needs of the community, economy and environment in terms of sustainability, effectiveness, efficiency and equity. The infrastructure rating principles are based on the view that: Infrastructure needs to be optimised in a systems context that requires:

complementarity in national, State/Territory and local government decisions best-practice governance arrangements across the infrastructure policy, regulation, planning,

provision, operation and maintenance activities competitive and efficient markets (which includes infrastructure reflecting the true cost of

provision, including externality costs and benefits) a minimum set of sector legislation, regulation and standards the efficient use of existing infrastructure and resources (requires long-term focus on

maintenance, renewals and demand management) a sustainability approach, which gives due regard to economic, social and environmental

factors planning that is based on data, evidence and informed decision-makers working in

partnership with stakeholders. Infrastructure should be planned, designed, built, operated and maintained in a sustainable,

cost effective, efficient and equitable manner over its life-cycle, which is typically 30 to 100 years depending on the infrastructure.

Decisions on infrastructure need to recognise that it both shapes and is shaped by the social, economic and environmental objectives set by the community.

Infrastructure decisions should balance the costs and benefits on the economy, society and environment by simultaneously optimising the following objectives: Economic growth, efficiency and effectiveness Health, safety and security Access and social justice Environmental responsibility Liveability, connectivity and amenity.

Infrastructure should be provided by both the public and private sectors to optimise taxpayer and infrastructure stakeholder best value

Governments and infrastructure organisations should have the relevant skills to effectively oversee the provision of infrastructure, whether the actual infrastructure policy, regulation, planning, provision, operation and maintenance are done by the public or private sector.

Infrastructure decisions should reflect current and anticipated challenges, such as demographic shifts, ageing, climate change adaptation, greenhouse gas mitigation and resilience.

Infrastructure decisions should be accountable and transparent.

Rating scheme The rating scheme is based on a cascading structure that details, at various levels of granularity, the key elements deemed to be essential to optimal infrastructure policy, regulation, planning, provision, operation and maintenance.

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The scheme has two high level Categories – future infrastructure and existing infrastructure. For each of these, there are three Components, which further divide into Element Blocks and finally Foundation Elements. This is illustrated in the figure below.

Rating scale Ratings given are based on the scale in the table below: Table: Rating scale

Letter grade

Designation Definition*

A Very good Infrastructure is fit for its current and anticipated future purposes

B Good Minor changes required to enable infrastructure to be fit for its current and anticipated future purposes

C Adequate Major changes required to enable infrastructure to be fit for its current and anticipated future purposes

D Poor Critical changes required to enable infrastructure to be fit for its current and anticipated future purposes

F Inadequate Inadequate for current and anticipated future purposes * Defined as infrastructure meeting the current and future needs of the community, economy and environment in terms of sustainability, effectiveness, efficiency and equity.

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Appendix B: Units and acronyms

Units J Joule, a unit of energy

W Watt (1W = 1 joule/second), a unit of power

Wh watt-hour (1Wh = 3600J), a unit of electricity energy

V Volt, a unit of voltage

l Litre, a unit of volume

Prefixes m milli, meaning 10-3

k kilo, meaning 103 (thousand)

M mega, meaning 106 (million)

G giga, meaning 109 (billion)

T tera, meaning 1012 (trillion)

P peta, meaning 1015 (quadrillion)

Acronyms ACCC Australian Competition and Consumer Commission

AEMC Australian Energy Market Commission

AER Australian Energy Regulator

AGO Australian Greenhouse Office

ARTC Australian Rail Track Corporation

BITRE Bureau of Infrastructure, Transport and Regional Economics

CBD Central Business District

COAG Council of Australian Governments

CPRS Carbon Pollution Reduction Scheme

DIRN Defined Interstate Rail Network

DITRDLG Department of Infrastructure, Transport, Regional Development and Local Government, formally DOTARS

GPG Gas-power generation

ha hectares

IRI International Roughness Index

ITS Intelligent Transport Systems

KPI Key Performance Indicator

LNG Liquefied Natural Gas

LPG Liquid Petroleum Gas

MAIFI Momentary Average Interruption Frequency Index

MRET Mandated Renewable Energy Target (scheme)

MW Megawatts

NEM National Electricity Market

NWC National Water Commission

NWI National Water Initiative

RET Renewable Energy Targets

SAIDI System Average Interruption Duration Index

SAIFI System Average Interruption Frequency Index

TEU Twenty-foot Equivalent Unit (container)

v/c Volume to capacity ratio

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Appendix C: Glossary

Roads Road infrastructure: Road infrastructure consists of:

the road pavement—the structure that carries traffic other structures—bridges, pathways, barriers, walls roadside assets—including engineering features such as traffic signs and guideposts, cuttings and embankments, and environmental features such as vegetated areas situated within the boundaries of the road reserve

roadside traffic signs—which regulate speed, warn of hazards and provide information pavement markings—designating the edges of the road and traffic lanes and providing directional and warning information.

Road maintenance: Pavement maintenance can be divided into the following classes: routine maintenance, which is reactive, addressing minor defects. This includes fixing potholes and rough patches on the pavement.

periodic maintenance to resurface and reseal the pavement to prevent water infiltrating the pavement structure, to address some aspects of surface roughness and to improve the traction of the pavement surface.

rehabilitation which involves a more significant treatment to improve the structural condition of the pavement and bring the surface back to within an acceptable level of roughness and traction.

Rail

Above rail: Those activities required to provide and operate train services such as rolling stock provision (i.e. trains, carriages), rolling stock maintenance, train crewing, terminal provision, freight handling and the marketing and administration of the above services.

Below rail: Those activities associated with the provision and management of rail infrastructure, including the construction, maintenance and renewal of rail infrastructure assets, and the network management services required for the safe operation of train services on the rail infrastructure, including train control services and the implementation of safe working procedures.

Broad gauge: The distance of 1,600mm (5’3”) between two rails.

Narrow gauge: The distance of 1,067mm (3'6") between two rails.

Rail infrastructure: Consists of both above and below rail infrastructure.

Standard gauge: The distance of 1,435mm (4’8½”) between two rails.

Ports

Berth: The wharf space at which a ship docks. A wharf may have two or three berths, depending on the length of incoming ships.

Break Bulk Cargo: Cargo that is not containerised, e.g. timber, paper, steel, vehicles, vehicle components.

Common-User Facility: A port facility not dedicated to a particular use and available for short-term hire.

Container terminal: A specialised facility where ocean container vessels dock to discharge and load containers.

Container: A metal container designed for cargo transport. Most containers are either 20 feet (six metres) or 40 feet (twelve metres) long and referred to 20TEU or 40TEU respectively.

Dead Weight Tonnage (DWT): Maximum weight of a vessel including the vessel, cargo and ballast.

Pilot: A licensed navigational guide with thorough knowledge of a particular section of a waterway, whose occupation is to steer ships along a coast or into and out of a harbour. Local pilots board the ship to advise the captain and navigator of local navigation conditions.

Stevedores: Labour management companies that provide equipment and hire workers to transfer cargo between ships and docks.

Twenty Foot Equivalent Unit (TEU): A unit of measurement equal to the space occupied by a standard twenty foot container.

Airports

Airport Master Plan: Airport Master Plans are a requirement of the Airport Acts 1996 and are prepared by major Australian airports every five years to provide a clear direction for the growth and development of the airport.

Airport Operator: The airport lessee or owner.

Curfew: A restriction on flights that can take off or land from specified airports at designated times.

General aviation: All civil operations other than Regular Public Transport operations.

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Leased Australian Government airports: The 21 Australian airports covered by the Airports Act 1996 where the Airport Operators lease the airport land from the Australian Government.

Non-aeronautical developments: Non-aviation commercial developments, such as retail outlets and office buildings, on airport sites.

Regular Public Transport operation (RPT): An operation of an aircraft for the purposes of an air service that is provided for a fee payable by persons using the service, is conducted in accordance with fixed schedules to or from fixed terminals over specific routes, and is available to the general public on a regular basis (synonymous with ‘scheduled services’).

Water

Annual Exceedance Probability (AEP): The statistical likelihood of occurrence of a flood of a given size or larger in any one year, usually expressed as a percentage.

Carrier (irrigation): A conduit for the supply or drainage of water. The key types are lined channel (an earthen channel lined with a low permeability material), unlined channel (an earthen open channel without internal lining), natural waterway (a stream or other naturally-formed watercourse), and pipe (a closed conveyance or carrier regardless of material, size or shape that conveys water, typically for supply service).

Catchment: An area of land where run-off from rainfall goes into one river system.

Consumptive use: The use of water for private benefit consumptive purposes including irrigation, industry, urban, stock and domestic use.

Effluent: Treated sewage that flows out of a sewerage treatment plant.

Greywater: Water from the kitchen, laundry and bathroom. It does not include toilet waste.

Headworks: Dams, weirs and associated works used for the harvest and supply of water.

Indirect Potable Reuse (IPR) water: Recycled water used as a source of potable water, typically by injecting it into a water reservoir.

Integrated urban water cycle management: The integrated management of all water sources so that water is used optimally within a catchment resource, in a state and national policy context. This approach promotes coordinated planning, sustainable development and management of the water, land and related resources linked to urban areas, and the application of Water Sensitive Urban Design principles.

Irrigation: The artificial application of water to land for the purpose of agricultural production.

Potable: Suitable for drinking.

Recycled water: Water derived from sewerage systems or industry processes, treated to a standard appropriate for its intended use.

Reticulation: The network of pipelines used to take water into areas of consumption; includes residential districts and individual households.

Run-off: Precipitation or rainfall that flows from a catchment into streams, lakes, rivers or reservoirs.

Sewage: The waste and wastewater discharged into sewers from homes and industry.

Sewerage: Infrastructure system for the collection, removal, treatment and disposal of sewage.

Stormwater: Urban rainfall that runs off roofs, roads and other surfaces where it flows into gutters, streams, rivers and creeks or is harvested.

Third pipe systems: A reticulated pipe network that distributes recycled water for use in gardens, etc.

Trade waste: Industrial and commercial liquid waste discharged into the sewerage system.

Urban runoff: Water deposited by storms or other sources that passes through stormwater drains or is harvested. Urban runoff may contain substantial level of pollutants such as solid wastes, petroleum-based compounds, heavy metals, nutrients, pathogens, sediment, organic chemicals, pesticides, insecticides and other lawn care and cleaning materials.

Wastewater: Water that, following capture or use by the community, does not currently have a form of beneficial recycling; includes greywater, sewage and stormwater.

Water allocation: The specific volume of water allocated to water access entitlements in a given season, defined according to rules established in the relevant water plan.

Water businesses: Organisations charged with supplying water to towns and cities across the State for urban, industrial and commercial use. They administer the diversion of water from waterways and the extraction of groundwater.

Water Sensitive Urban Design (WSUD). The integration of urban planning with the management, protection and conservation of the urban water cycle, ensuring that urban water management is sensitive to natural hydrological and ecological processes. This involves the integration of water cycle management into urban planning and design so that it minimises the risks to the water bodies that supply water or receive the stormwater or recycled water.

Wholesale market: A competitive market where a commodity such as water can be sought from multiple suppliers.

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Electricity Carbon Pollution Reduction Scheme (CPRS): The CPRS is the Australian Government's emissions trading scheme,

which has two distinct elements, the cap on carbon pollution and the ability to trade.

Contingency events: Events that affect the power system’s operation. Their categories are: credible contingency events, events whose occurrence is considered ‘reasonably possible’ in the circumstances. For example, the unexpected disconnection or unplanned reduction in capacity of one operating generating unit, or the unexpected disconnection of one major item of a transmission plant.

non-credible contingency event, events whose occurrence is not considered ‘reasonably possible’ in the circumstances. Typically, a non-credible contingency event involves simultaneous multiple disruptions, such as the failure of several generating units at the same time.

Demand-side management (DSM): The planning, implementation and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand.

Generator (Baseload and peaking): Baseload generators provide the continuous ongoing electricity supply while peaking generators provide supplemental power to meet energy demand peaks.

Interconnector: Transmission line/s that connects transmission networks in adjacent regions.

Load shedding: Reducing or disconnecting load from the power system either by automatic control systems or under instructions from the AEMO.

Reliability of supply: The likelihood of having sufficient capacity (generation or demand-side response) to meet demand.

Reliability Standard: The requirement that there is sufficient generation and bulk transmission capacity so that, over the long term, no more than 0.002% of the annual energy of consumers in any region is at risk of not being supplied, i.e. the maximum USE is 0.002%.

Unserved energy (USE): The amount of energy that cannot be supplied because there are insufficient supplies (generation) to meet demand.

Gas

Coal seam methane (CSM): Methane absorbed into the solid matrix of coal beds, and then extracted.

Linepack: Gas maintained in a gas transmission line to maintain pressure but also as a buffer to provide an uninterrupted flow of gas to customers.

Liquefied Natural Gas (LNG): Natural gas that has been converted temporarily for ease of storage or transport. LNG takes up about 1/600th the volume of natural gas in the gaseous state.

Natural gas: Gaseous fossil fuel consisting primarily of methane but including significant quantities of ethane, butane, propane, carbon dioxide, nitrogen, helium and hydrogen sulphide.

Unaccounted-for gas (UAFG): The difference between metered injected gas supply and metered and allocated gas at delivery points. UAFG comprises gas losses, metering errors, timing, heating value error, allocation error and other factors.

Telecommunications

2G: Second generation mobile telecommunications, digital mobile service that provides voice communications and a low level of data transmission.

3G: Third generation mobile telecommunications, digital mobile service that provides voice communications, high-speed data transmission and internet access.

4G: Fourth generation mobile telecommunications, digital mobile service that provides voice communications, high-speed data transmission and internet access.

Asymmetrical digital subscriber line (ADSL): A technology that converts telephone lines to paths for high-speed data services; enhancements to this technology include ADSL2 and ADSL2+.

Backhaul networks: Backhaul transmission networks connect the central point of an access network (such as telephone exchange, HFC hub or mobile tower) to the rest of the network. Backhaul transmission is provided on either optical fibre or microwave. The majority of backhaul transmission networks are provided by Telstra and Optus with other operators including AAPT, Amcom, Ergon, Nextgen, PIPE Networks, Primus, QLD Rail and Soul. While there is competition in backhaul networks between all capitals and within many inter-exchange routes, many regional routes are served by Telstra alone.

Bandwidth: The maximum data transmission rate, measured in bits per second (bps)

Broadband: ‘Always on’ high data speed connection. Technologies used to deliver broadband include ADSL, HFC, fibre-optic cable, wireless and satellite.

Broadband over power line (BPL). A communications technology that uses electricity networks for the transmission of data, voice and video.

Customer Access Network (CAN): The link between the telephone exchange and the consumer.

Code division multiple access (CDMA): A digital standard that separates calls from one another by code.

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Digital subscriber line (DSL): A transmission technology that enables digital data services. DSL describes several technologies including ADSL, ADSL2 and ADSL2+.

DSLAM (Digital Subscriber Line Access Multiplexer). Technology located at exchanges or in roadside cabinets that take the copper lines from a customer premises and convert signals on/off them into a high speed pipeline to the internet.

Fibre-to-the-x (FTTx): A generic term for the configuration of a broadband network that uses optical fibre to replace all or part of the usual metal connection to the consumer. (FTTB) Fibre-to-the-building: fibre reaches the boundary of the building. (FTTH) Fibre-to-the-home: fibre reaches the boundary of the living space. (FTTK) Fibre-to-the-kerb: fibre reaches typically within 300m of the consumer’s premises. (FTTN) Fibre-to-the-node: fibre reaches a street cabinet typically further than 300m from the consumer’s premises.

Global system for mobile communication (GSM): A digital cellular standard operated by Telstra, Optus and Vodafone.

Hybrid fibre coaxial cable (HFC): A telecommunication connection that consists of optical fibre on major routes and coaxial cable connections to consumers.

Long Term Evolution (LTE). LTE is an advanced mobile telecommunications standard and considered a pre-4G system.

Microcell: An antenna and associated box that supplements the mobile network in heavy usage areas. A microcell may minimise the need for a larger facility.

Public switched telecommunications network (PSTN): The network of the world's public circuit-switched telephone networks.

Speed: Typical speeds are kilobits per second (kbps) and Mbps (Megabits per second).

Telecommunication facility: Any part of the infrastructure of a telecommunications network; or any line, equipment, apparatus, tower, mast, antenna, tunnel, duct, hole, pit, pole or other structure or thing used, or for use, in or in connection with a telecommunications network.

Voice over internet protocol (VoIP): A protocol for transmitting voice over data networks, also known as ‘Voice over DSL’.

WiMAX (Worldwide Interoperability for Microwave Access). A wireless digital communications system, which can provide broadband wireless.

201

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