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Water supply under review

Friday, 2nd May, 2014

By Andrew Robertson

Essential Energy will scrap its Far West Region from Monday and review its water supply operation under cost-cutting measures announced yesterday.

 The changes mean Broken Hill will no longer be a regional headquarters for Essential Energy, which is reducing the number of its regions in NSW from five to four.

Far West Region will be scrapped with the area redistributed across the Northern and Southern regions, which have their regional offices in Dubbo and Wagga. 

Far West Regional Manager Guy Chick said yesterday there would be no forced redundancies as a result of the restructure, and that the Beryl Street office would remain open.

“Far West employees will continue to maintain and operate the local electricity network and provide water and sewerage services as usual,” the company said in a statement.

But the changes would result in a number of people being redeployed, including Mr Chick, who has held the position for almost 10 years.

Essential Energy said a review of its entire business found economies of scale could be achieved by redistributing the enormous but sparsely populated Far West Region.

It said the changes were part of reforms aimed at limiting network price increases to CPI in order to “lessen the impact on electricity bills”.

“A critical review of all areas of the business has been undertaken, including a re-assessment of regional boundaries and resources within those regions,” the company said.

“This review has identified an opportunity to redistribute the Far West Region across the Northern and Southern regions to achieve further economies of scale.”

“The remaining Far West regional management team will assist with the transition over coming months.”

Despite the changes Essential Energy said it would continue to retain a strong presence in the Far West.

While he will remain in Broken Hill, Mr Chick will move to a new role from Monday focussing on “developing, managing and implementing” a revised business plan for Essential Water.

This follows a recent draft determination by IPART into water and sewerage service prices for Broken Hill.

Mr Chick said the draft determination represented a 15 per cent reduction in Essential Water’s operating costs, and a 26 per cent reduction in capital spending, over four years. 

That meant significant changes needed to be made to the water business to reduce costs, said Mr Chick, who flagged possible reductions in service levels and capital works in coming years.

The utility’s capacity to respond to call-outs and to carry out repairs to the network’s ageing infrastructure were two areas that could be affected into the future, he said.

Mr Chick said the new business plan needed to be implemented by July 1, when new water and sewerage charges come into effect.

It’s unclear if the State Government, which has historically provided a $1.5 million subsidy, will continue to provide a water subsidy in the future.

While the water business will remain part of Essential Water for now, Mr Chick also said a change in ownership would have to be made sometime in the future. 

The State Water Corporation had been carrying out due diligence on Essential Water with a view of possibility taking over the state-owned business.

But the government’s plan to merge State Water and the Sydney Catchment Authority may have pushed back work on that proposal.

“It (Essential Water) needs to find a more appropriate home but there has not been a decision made yet,” Mr Chick said.

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