Research reveals that small water utilities hold their own against industry heavyweights

Posted 19 May 2017

Research reveals that small water utilities hold their own against industry heavyweights Are small- to medium-sized regional councils able to manage water utilities effectively, or is a privatisation model necessary for success?

Andrew Francis from Parkes Shire Council and Central NSW Councils (Centroc) Water Utilities Alliance spoke to delegates at Ozwater’17 about how regional utilities can “think and act like a larger water utility”. 

Centroc is a body made up of a number of councils in Central NSW that uses opportunities for resource and skills sharing among geographically linked water utilities, Francis said. 

“We’re sick of continual talk about ‘reform’,” he said. 

“We sat down and looked at what has been reformed, what’s come out of the rest of Australia and the rest of the world.”

There are a number of benefits of the Centroc model, Francis said, including the ability to have a centralised voice speaking to State and Federal Governments. 

“We have one single voice collaborating with State Government rather than 15 voices,” he said. 

“We’ve pulled in more than $3 million in grant funding from the Federal Government, all of the councils are up to best practice compliance, and we have a three-year rolling business plan for the alliance.”

Attendees at the conference also heard research conducted by Shoalhaven Council in partnership with Balmoral Group Australia in response to a proposed merger by the State Government of Shoalhaven City Council and Kiama Municipal Council. 

The aim of this study was to capture the publicly available information that would be relevant to analysing the current Shoalhaven Water governance and operational models. 

Although the merger didn’t happen, if it did Sydney Water would have had a 3% increase in customers accompanied by a 37% increase in their operating area, a situation they were unlikely to appreciate, Carmel Krogh from Shoalhaven City Council said. 

“What really was the end game in all this?” she asked. 

“Throughout most of the merger documentation, there was no mention of water and sewerage.” 

They found that local councils had better debt to equity ratios than bigger water manufacturers, with Mid Coast Water (the best case) having a 23% debt to equity ratio, and Sydney Water having a 98% ratio.  

“Local water utilities don’t carry significant debt,” said Grant Leslie from the Balmoral Group. 

The results of the research found that the Shoalhaven Water organisational model is effective and efficient for the provision of water and sewer services in a regional context.