Water
Insync Surveys specialises in surveys, research and consulting in the water sector.
From staff surveys of water corporations to:
- surveys of exiting staff
- customer perceptions surveys
- strategic thinking about bringing tariff structures into line with community expectations
- assessments of uptake rates on new water products
- choice modelling and willingness to pay studies
Insync Surveys is a credible and passionate provider. We help make water authorities more effective, by combining water industry knowledge with research skills. Here are some of our thoughts about current issues in the water sector.
February 2012: IPART releases customer engagement discussion paper
IPART has released a discussion paper on customer engagement on prices for monopoly services. The paper reviews options for customer engagement. The basis for the paper is stakeholder engagemnt last year. IPART are keen for feedback on the paper by 23 March 2012. We think that this feedback would be feedback on feedback given as a result of feedback from stakeholders on the feedback process. They do say it's a loop!
January 2012: Are Inclining Block Tariffs dead in the water?
Are IBTs dead in the water? Did anybody mandate them in the first place? Our water customer surveys show that consumers know a lot more about their total bill than about the various components of it. They certainly don't realise that IBTs don't make a big difference to the total cost per kl a household pays once the fixed charges are incorporated. Instead, getting rid of IBTs can too easily be seen as water utilities not sending the appropriate conservation signals. Any volunteers to explain a declining cost curve to a local paper?
December 2011: Do you already have enough customer information to satisfy your WIRO requirements for WP3?
Many water corporations are drowning in water customer survey, focus group, online forum, consultative committee and written feedback data. This will have been colleced over a period of years by skilled and concerned members of staff in different parts of the organisation. Some of the data were collected for the WSDS, or in the course of annual customer surveys, or in relation to other research projects; but the data are all over the corporation and were collected from different stakeholders at different times using different feedback channels. Unfortunately, many corporations don't have the time or the specialised skills to analyse and synthesise the data into what the WP3 strategists and economists need to make a plan that pays due attention to customer feedback. If only there was a party that could take all the data and draw conclusions that were:
- Completely based on evidence and not opinion based
- Useful for WP3 staff and
- Expressed in plain language
As drafts come together all water corporations are concerned about whether they have satisfied the provisions of the WIRO. If there is any doubt, maybe Insync Surveys can be of assistance. Our water industry expertise and data mining capabilities mean that we can turn existing customer data into insight for comms teams and WP3 teams alike.
December 2011: The issue of tenants
Recommendation 6.3 of the Productivity Commission's recent report into Australia's Urban Water Sector suggests that tenants should incur the fixed and volumetric water/wastewater charges. Currently, many tenants only pay the volumetric charges. Adding up to $500 of fixed charges per annum would constitute a 4% rent rise for people paying $1,000 per month; or 2% for those paying $2,000. No equalisation measure is suggested by the Productivity Commission, and can anyone see landlords giving a reduction in rent to compensate unless forced to do so?
There are many State based schemes that provide a measure of hardship assistance to concession card holders; however most of these provide only a 15% discount on the water bill.
Despite the inequities and hardships; the current situation makes little sense in terms of incentives. The landlord has the option of investing in water saving infrastructure at the leased property but gets none of the benefit in terms of reduced volumetric charges. The tenant may be faced with wasteful appliances and leaks but is faced with a landlord who has no interest in improving the situation.
Putting all charges onto the tenant doesn't alleviate this situation; since the cannot be expect to install dual flush toilets and water efficient shower heads at their own cost. Much as we abhor any (further) complication of the taxation system; a 150% tax rebate for water saving infrastructure, or simply being able to expense the investment might encourage the right behaviours.
For water authorities, the Productivity Commission has got it right: keep a system that ensures plenty of water is sold and at the same time reduce the overhead with one less bill.
November 2011: Discussion paper released by Commonwealth Environmental water.
We have until April 2012 to respond to this discussion paper. One key point for discussion is the relative merits of tenders, EOIs, using brokers or online platforms. Like optimising our electricity generation portfolio to cater for present and future needs and taking into account fuel prices, carbon taxes and policy changes; taking a portfolio approach to the instruments where the Commonwealth interacts with the water markets is prudent. The discussion paper can be found at http://www.environment.gov.au/ewater/publications/water-trade-discussion-paper.html .
One question is how the office will weigh, for example, one hundred almost identical submissions from irrigators with that of a Department of Water economics from a University; and the transparency of that weighting. Would a water customer survey help? Where on the IAP2 spectrum should the Commonwealth place its energies?
October 2011: How far can a postage stamp go?
Postage Stamp Pricing....how far should it go? The tyranny of distance has made postage stamp pricing a generally accepted part of Australian economic life, applied to electricity, gas, water, the NBN and, well, postage stamps. Water consumers in cities regularly subsidise O&M costs of the small towns in their areas without much ado. However, do they know the extent of the subsidies? How fair is it that the largest town in each utility's area has to subsidise the smaller towns, but the next biggest town e.g. Melbourne, doesn't subsidise the regional centres? Hydrogeological arguments don't always hold water in the case, since the small towns in question often draw from separate systems or even groundwater.
You might expect that as a specialist in water customer surveys, focus groups and consulting; we'd advocate a water customer survey in all cases. Often it is a good idea, but how much do customers really know about the existance or extent of subsidies?
October 2011: Productivity Commission report into Australia's Urban Water Sector
In October 2011 the Productivity Commission released its report into Australia's Urban Water Sector. http://www.pc.gov.au/projects/inquiry/urban-water/report We applaud the many recommendations aimed at increasing the economic efficiency of the sector. However, do the recommendations accord with the values of the general public? For example, recommendation 5.1 suggests that regional urban water authorities be allowed to trade water unless there is a net public benefit in prevent such trade. Insync Surveys' water sector research shows that public acceptance of agricultural trade is not universal, let alone acceptance of trade at the utility or household level. The fact of the matter is that as a utility, and an emotive one at that, water attracts passion and apathy in equal measure.
September 2011: How to choose between hundreds of infrastructure projects
Water Plan 3 planning is now well underway. There are team(s) doing the hard work of calculating the revenue requirement, and have long lists of projects that need to be done.
Some of these projects will be compliance based, in response to DSE directives. Others will be to replace aging infrastructure, augmenting existing infrastructure and supplying new water and sewer services where none previously existed.
Apart from capital works projects; no doubt corporations are considering how to build and sustain the capabilities of their organisation, forecasting the cost of Learning and Development, salary increases and changes to headcount.
Lastly, there are leases, overheads and hobby horses to consider.
On top of these considerations there are new board members, in some cases even a new chair. The extent to which these people will change priorities is unknown, for now.
The revenue requirement will be built up out of all these initiatives, but do organisations' aspirations, strategies and key business drivers provide enough guidance to prioritise them? Do corporation execs know how their board would have them choose between fixing an expected sewer blockage point and replacing part of a treatment plant? Perhaps you should make a bandaid fix to the blockage in order to bring the treatment plant upgrade forward by two years, even though the total cost would increase.
There are other hard questions that corporations face in building the revenue requirement. Should they upgrade the GIS system before augmenting supply in areas where usage might exceed capacity if household demand returns to 220kl? If you augment supply but post drought usage never bounces then you will be open to accusations of gold plating your infrastructure.
Feel free to get in touch if prioritising your spend is proving difficult. A water customer survey might help to incorporate the voice of customers; but there are many other drivers of business success that also need to be factored in.
August 2011: The externalities of "willing sellers"
Can regional urban water utilities ever buy water from willing agricultural sellers without a public backlash? One might as what is it about the words "willing sellers" that doesn't get through? Instead, towns are characterised as stealing water, robbing entire regions of their livelihood and taking advantage of people in need. The most obvious explanation (unless you think the general public are stupid) is a lack of education. With an aging farming workforce, selling water provides many with a retirement option that doesn't involve leaving the farm. For farmers in financial need, the only thing worse than selling water would be not being able to sell it. Judging by the backlash, water utilities would be well served by increasing their marketing spend now so that these actions are better accepted when the next drought comes.
Of course, there's another important side to the "willing sellers" debate. That's the side of the farmers left with an increasing share of the maintenance costs of channels. This only applies in some jurisdictions. In others, even if the water is sold, the obligation to pay for the maintenance of the channel remains. For farms where the water has been sold but that still have a $10,000 per annum bill from the irrigation company, the net value of the land is very low indeed; especially if annual rainfall is less than 400mm.
July 2011: Should all water be owned?
The beach in Bali: the tragedy of the commons overcome. Since Garret Hardin opened the "pandora's can of worms", economists have told us that private goods are better preserved than public goods, which are usually undersupplied and overused. Some public goods, such as a beach, clearly benefit from private responsibility, such as the beach in Bali. Each 20m stretch is leased by a person hiring sun lounges and umbrellas. Further space is sublet to those who rent surfboards and food stalls. Dawn finds the beach deserted apart from leaseholders cleaning their stretch of every spec of flotsam so that customers will be attracted to the beauty of their leasehold. Thus is the tragedy of the commons avoided.
Carving up water is both literally and legally difficult. However, there are obvious benefits to be gained from ownership, regardless of whether the owner is a farmer or the environmental water holder. Economic efficiency would probably be maximised by full tradability of all water; which would entail the environmental water holder selling in drought years at high prices and buying in normal years at low prices to provide our rivers with the floods they need. Are the public ready for this though? How are we going to explain why the "government" is selling the natural environment short while farmers "waste" water.
April 2011: The WIRO requires corporations to test tariffs with customers
Meanwhile, in Victoria and the ACT, it's ironic that 2011/12 is the year when water corporations have to work out how much water their customers are going to demand from 2013 to 2018. The irony is that past data would suggest that customers don't use water no matter how much it rains. They didn't use it in drought and they're not using it in flood.
Of course, we will all use scenarios that forecast a return to medium amounts of rainfall; which would suggest that for once there will be a happy co-incidence of high supply and high demand. Usage will inevitably jump from drought lows, and post drought new lows to 200kl (ish) per household. If winters are wet and summers are hot some utilities might even be in danger of making too much profit, something the ESC will just love.
The WIRO requires utilities to demonstrate that customers have been engaged in decisions on tariff structures and major spending. This means that more than the usual water customer satisfaction survey to inform WP3.
However, there's a bit of a chicken and egg thing going on here. We only know the revenue requirement once we know how much infrastructure we have to build. We only know the infrastructure requirement once we know the public's preferences for supply and security, and we only know the supply and security preferences when we can put a dollar value on them.
