Transcript Client Name Gladstone Regional Council Project Name 1770/Agnes Water – Integrated Water Project Date 8 April 2008 Gladstone Regional Council Integrated Water Strategy.

Client Name
Gladstone Regional Council
Project Name
1770/Agnes Water – Integrated Water Project
Date
8 April 2008
Gladstone Regional Council
Integrated Water Strategy
Summary
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Background to Water in 1770/Agnes Water Region
Key Issues
Integrated Water Project
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Options Considered
Technical Solutions
Environmental Approvals
Review Process
Tender Process
– Tender
– Comparison of Offers
– Comparison to Budget
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Contract Structure
– Condition Precedent and Contract Position
– Contract Payments
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Community Consultation
Financial Modeling
Recommendations
Gladstone Regional Council
Integrated Water Strategy
Water Supply
> Rainwater tanks only supply till 1992
> Sand excavation trench, bores and treatment installed
> Reedy Creek water strategy
Gladstone Regional Council
Integrated Water Strategy
Water Supply – Trench
Gladstone Regional Council
Integrated Water Strategy
Water Supply - Bores
Gladstone Regional Council
Integrated Water Strategy
Water Supply – Treatment Plants
Gladstone Regional Council
Integrated Water Strategy
Water Resources
Gladstone Regional Council
Integrated Water Strategy
Water Supply - Bores
Gladstone Regional Council
Integrated Water Strategy
Water Resources
Gladstone Regional Council
Integrated Water Strategy
Ground Water Investigations
Gladstone Regional Council
Integrated Water Strategy
Defined Water and Sewerage Area
> The ultimate population for Agnes Water/1770 in the
defined Water and Sewerage Areas is 26,500 ep
> Water Supply required - 2,000 ML/annum
> Only 2 technical options
- Desalination
- Pipeline from Gladstone
Gladstone Regional Council
Integrated Water Strategy
Comparison of Options
Capital and NPV comparisons (6% growth)
Awonga
pipeline
$100
Cost ($m)
$80
Eurimbula
pipeline
$60
$40
$20
Desalination
Plant
$0
Total Capital
Cost ($m)
Gladstone Regional Council
Integrated Water Strategy
Net Present
Cost ($m)
Year 1 Cost
Water Supply Strategy
> Continued incentives for efficient use of water
> Develop additional temporary bores at Red Pit
> Extend the reticulation pipes to the Red Pit and feed
water back to Agnes Water
> Construct a Desalination Plant
Gladstone Regional Council
Integrated Water Strategy
1770 Water Supply
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Rainwater tanks
Private bores to supplement requirements
Small local bores supply caravan park and public toilets
Evidence of groundwater contamination in some private
bores
> Decision made to extend the water supply scheme to
1770 in consultation with Community
Gladstone Regional Council
Integrated Water Strategy
Sewerage Background
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Septic tanks only treatment till 1993
Reticulation and treatment plant completed in 2001
Treatment plant located 8km south of Agnes Water
Facultative lagoons (35 ML) and land based disposal to
an irrigation area (36 Ha) adjacent to Deep Water
National Park
Gladstone Regional Council
Integrated Water Strategy
Sewerage Treatment and Disposal
Gladstone Regional Council
Integrated Water Strategy
Wastewater – Lagoon System
Gladstone Regional Council
Integrated Water Strategy
Wastewater – Disposal Area
Gladstone Regional Council
Integrated Water Strategy
Key Water Issues
> Permanent Restriction since Sept. 2000
> High Water and Wastewater Pricing
Gladstone Regional Council
Integrated Water Strategy
Key Water Issues
> Population Growth in Serviced Area
Gladstone Regional Council
Integrated Water Strategy
Key Water Issues
> Lack of Reliable Water Supply
Gladstone Regional Council
Integrated Water Strategy
Key Water Issues
> Over-commitment of Water Supply
Gladstone Regional Council
Integrated Water Strategy
Key Water Issues
> Water Quality from bores is excellent; but trenches
difficult to consistently treat satisfactorily
> Lack of Water supply in 1770
> Groundwater Contamination in 1770
> Poor quality of treatment infrastructure
> Difficulty in recruiting & retaining professional and
technical staff
Gladstone Regional Council
Integrated Water Strategy
Key Sewerage Issues – EPA Failure
BOD Results
BOD5 Chart
180
160
140
120
mg/L
100
80
60
40
Licence limit
20
0
-20
19-Apr-01
5-Nov-01
24-May-02
10-Dec-02
28-Jun-03
14-Jan-04
1-Aug-04
17-Feb-05
5-Sep-05
24-Mar-06
Date
MP02/1
Linear (MP02/1)
Gladstone Regional Council
Integrated Water Strategy
Lagoon 3 Outlet
Linear (Lagoon 3 Outlet)
Lagoon 4 Outlet
Linear (Lagoon 4 Outlet)
Acceptable Limits
10-Oct-06
28-Apr-07
Nitrogen Trend in Run-off Water
Storm Water to Deepwater National Park
Total Nitrogen
6
5
4
3
mg/L
2
1
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-1
-2
-3
6-Dec-99
19-Apr-01
1-Sep-02
14-Jan-04
28-May-05
10-Oct-06
Date
MP97/1
M2
Linear (MP97/4)
Gladstone Regional Council
Integrated Water Strategy
MP97/2
MP00/9
Linear (97/6)
MP97/3
Linear (MP97/1)
Linear (M2)
MP97/4
Linear (MP97/2)
MP97/5
Linear (MP97/3)
97/6
Linear (MP97/5)
Key Sewerage Issues
> Wastewater Capacity needs to be increased as at
current licence:
– Poor track record with existing system
– EPA preference for higher value re-use
> Limited options for reuse of treated wastewater
Gladstone Regional Council
Integrated Water Strategy
Integrated Water Strategy
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Council commitment to sewer 1770
Council commitment to supply drinking water to 1770
Modular desalination plant
Modular wastewater plant
Outsource operation of existing Agnes Water wastewater
lagoons and water treatment plant to address professional staff
issue
> Outsource operations, maintenance, asset replacement and
upgrades to new water to wastewater treatment facilities
> Provision of additional services to Council.
Gladstone Regional Council
Integrated Water Strategy
Technical Solutions Proposed
> Conventional reticulated water to the town of 1770
> Low pressure sewer to the town of 1770
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Difficult terrain
Rock outcrop
Existing roads and services
Established residential landscape
Gladstone Regional Council
Integrated Water Strategy
Membrane Operating Ranges
Effective
pore size
m (log)
0.001
0.01
Nominal
pore size
0.1
1.0
10
100
1000
Relative Particle Sizes
Metal ions
Virus
Bacteria
Coal dust
Aqueous salts
Cryptosporidium
Separation
Process
Ultrafiltration
Microfiltration
Gladstone Regional Council
Integrated Water Strategy
Beach sand
Giardia
Membrane Filtration
Solids
Virus
Air
Treated effluent
Bacteria
Gladstone Regional Council
Integrated Water Strategy
Membrane
Technical Solutions Proposed
> Conventional Desalination plant
– 7.5 ML/d intake pipeline (25,000 ep)
– 1.5 ML/d modules
Gladstone Regional Council
Integrated Water Strategy
Technical Solutions Proposed
> Modular MBR Wastewater
– 600 KL/d with 300 KL/d Membrane
Gladstone Regional Council
Integrated Water Strategy
Technical Solutions - Layout
Gladstone Regional Council
Integrated Water Strategy
Environmental Approvals
> Commonwealth Environmental Approval under the Environmental
Protection and Biodiversity Conservation Act – deemed to be not a
controlled action;
> Joint Marine Parks and Great Barrier Reef Marine Parks Approvals;
> Environmental Protection Agency – Prescribed Tidal Works Approvals;
> Queensland Transport – Maritime Safety approval;
> Cultural Heritage Management Plans agreed with representatives of
traditional owners; and
> Department of Natural Resources is prepared to sign off resource
entitlement for easements and Permits to Enter for the project
Modification required to match alternate pipeline route
Gladstone Regional Council
Integrated Water Strategy
Peer Review & Checks
> DNR approval of planning reports for the project and DLGP funding
commitment of $23m
> Cardno (Qld) Pty Ltd reviewed the costs of the pipeline options and
desalination option
> John Chappell Engineers reviewed the offshore pipeline alignments that
were proposed in the Parsons Brinckerhoff Feasibility Report.
> Review of the financial capability of shortlisted proponents by Probity
Investigators Pty Ltd indicated that they were financially suitable for the
project.
> Jacob Marsden & Associates carried out Present Value analysis of the
tendered desalination option and estimate for pipeline indicating a
minimum difference of 16%
> QTC have reviewed and are satisfied with the financial planning for the
project
Gladstone Regional Council
Integrated Water Strategy
Tender Process
> Project structured to attract quality Operator
> Formal Tender Process Completed
– Transaction Manager – formal planning of Tender Process
– Engineering, Legal and Probity Advisors
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3 Respondents qualified under EOI process
2 Technical competent offers received
DLGP provided with early advice on additional funding (7 Nov. 2007)
Probity and Evaluation plan followed
United Utilities Australia (UUA) recommended
Minister meeting and support 9 Jan 2007
Ministerial approval to sign contract
Negotiation to lock in prices, options and final agreement
Contract signed 16 January 2008 subject to Condition Precedent
Gladstone Regional Council
Integrated Water Strategy
Desalination v’s Pipeline
> DLGP request for review of Pipeline v’s Desalination
> Full NPC cost comparison by Marsden Jacob
> Desalination prices:
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Fixed tendered price
Maximum price model (risk adjusted)
Potential cost reduction of ~ $3.0m not included
Include full asset replacement
Include bore treatment plant and system management
> Pipeline price was Cardno estimate only.
> Desalination NPC was materially lower by 16%
Gladstone Regional Council
Integrated Water Strategy
Desalination v’s Pipeline
Objective
Pipeline
Desalination
Cost and Funding
Maximise State Funding
40% available
80% available
Minimise Capital Costs
$42.3M plus 18 months
inflation
$24.59M
Capital Cost Certainty
Council risk
Fixed Price
Operations cost certainty
Council risk
Fixed Price
Operations performance certainty
Council risk
Fixed Price
EPA wastewater Compliance
Delay of 18 months
Contract signed
Water supply and groundwater contamination
Delay of 18 months
Contract signed
Professional & Operations Staff
Issue remains
Contract Condition
Operations
Compliance
Gladstone Regional Council
Integrated Water Strategy
Scope of Agreement
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The Operator will, at its own cost and risk, design, construct,
operate, repair and maintain each Facility so that it can
provide the Services to at least the Quality Standards;
Unless the Council expressly agrees to bear any risk …
without limitation the Operator will accept the risk, whether or
not this agreement refers to the risk;
The Operator shall perform the obligations in accordance
with the Minimum Standards and this agreement on the basis
of the Operator’s Submission; and
The Council shall pay the Operator for designing,
constructing and operating each Facility to at least the
Quality Standards.
Gladstone Regional Council
Integrated Water Strategy
Contract Structure
> Contract Price
– All inclusive with allowance for rock,
acid sulphate soils and difficult
geotech in sea water pipeline
> Form of Contract – Design, Build,
Operator and Assist*
> Team – 10 years plus two 5 year
extension (Council Option)
> Similar and Reference Contracts
– Wagga, Wodonga, Noosa (2),
Redcliffe, Bendigo etc.
Gladstone Regional Council
Integrated Water Strategy
Activity
Responsibility
Design
UUA
Construction
UUA
Operation
UUA
Maintenance
UUA
Asset Replacement
UUA
Payment
Council
Land
Council
Pre-existing
Contamination
Council
Approvals
Joint
Contract Structure
> Security of $3.0 million reduced to $1.5 million after commercial acceptance and
performance trials;
> Liquidated Damages:
– Water Treatment Plant ($2,000/d),
– Wastewater Treatment Plant ($2,000/d) and
– 1770 Pipeline ($2,000/d);
> Onus of Proof – is on the Operator.
> Toll Abatement (Revenue Deduction)
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Pre determined % reduction in toll;
Maximum is 20% (eg Reservoir level not maintained)
Abatement is to maximum level
6 individual monthly failures over one year can lead to Contract default and costs.
> Variations
– Pre- agreed deductions for sea water pipeline (subject to Geotech)
– Pre-agreed rates for rock and acid sulphate soil
– New variations to be signed off by Authorised Officer
Gladstone Regional Council
Integrated Water Strategy
Community Consultation
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2 Public Meetings in 2005
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Community Reference Panel (CRP)
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50% community support
Nomination called in 2007
Representations for development, social and indigenous area are
nominated
Purpose is to inform and provide feedback from the community;
UUA supportive of CRP
Gladstone Regional Council
Integrated Water Strategy
Financial Modeling
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20 year financial model
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Review Marsden Jacob
Review and audit by QTC
Council provided individual water and wastewater reserves for funding capital works
Assumed 4.5% Council cost increase
No additional rate increase
Assumed PIFU growth of 6.5%
Full user pay with no ratepayer subsidy
Affordability - Refer Section 6.3 of Report
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State funding approved to $23M (SCAP and WASP funding)
Additional $4.8M required (normal 40% WASP funding)
Additional $5.9 M (DLGP funding)
Combining water and sewerage business units
Internal loan from Constrained Works Reserves (Developer Water and Sewer reserves) for
initial 7 years
No cross subsidy from general rates
Gladstone Regional Council
Integrated Water Strategy
Summary
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The Agnes Water - Water supply scheme is overcommitted and requires immediate
augmentation
The sewerage treatment plant is not performing satisfactorily and requires immediate remedial
action
The sewerage scheme requires remediation and additional treatment capacity
Council undertaking to provide reticulated water and sewerage to 1770 to alleviate health risks
Pipeline options considered at key stages since 1992 have not proved economic or affordable
There is no alternative proposal that can meet the objectives or deadlines required by this
project
The Integrated Water Strategy has been examined and peer-reviewed by engineers, scientists,
State Government Departments and Queensland Treasury Corporation, and is recognised as
the most economical and affordable water supply option for Agnes Water/1770
Council has a low risk contract with one of the Worlds Best Operators
There is substantial financial assistance from the State Government for the project.
Gladstone Regional Council
Integrated Water Strategy
Recommendations - Refer Section 7 of Report
Recommendation
Recognising the needs of the community of 1770 and
Agnes Water for secure and reliable water services,
Council continue with the Integrated Water Project
and proceed to attain additional funding to satisfy the
Condition Precedent.
Gladstone Regional Council
Integrated Water Strategy
Strategy Moving Forward
> Secure additional State Funding from DLGP by 22
April 2008
> Develop Contingency Plan for alternate funding
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Funding alternatives
Extension of Condition Precedent Time Limit
Gladstone Regional Council
Integrated Water Strategy
Queensland
Ground Floor
171 George Street
Brisbane QLD 4000 Australia
t +617 3228 0700
f +617 3228 0799
Victoria
Level 10
350 Queen Street
Melbourne VIC 3000 Australia
t +613 9691 0088
f +613 9691 0001
www.perongroup.com.au
Gladstone Regional Council
Integrated Water Strategy