Gladstone Regional Council 1770/Agnes Water Client NameGladstone Regional Council Project Name1770/Agnes Water Integrated Water Contract Requirements Date20 July 2008

Gladstone Regional Council 1770/Agnes Water Providing Infrastructure advice in … About the presenter

Gladstone Regional Council 1770/Agnes Water Water and Wastewater Utilities Services Agreement >Parties –Gladstone Regional Council; and –United Utilities Australia. >Purpose –“ The Council proposes to implement the “1770/Agnes Water Integrated Water Project to provide sufficient good quality water and wastewater services to the townships of 1770 and Agnes Water.” >Process: –Contract Procurement workshop –Business Case –QTC Financial Modeling –Detailed Options Analysis –Environmental approval –Planning approval –Expression of Interest –Tender –Award subject to limited Condition Precedent (CP) –Modification, funding approval and release of CP Introduction

Gladstone Regional Council 1770/Agnes Water >Form of Contract :Fixed Price - Design Build Operate >Term:10 years post Commercial Acceptance with 5 year extension (20 years) >References Contracts:Wagga, Wodonga, Ballarat (2), Noosa (2), Central Highlands (3) etc >Aim: To engage with a best practice Operator; leverage high standard of performance; provide price and performance certainty all in an affordable package (contained water rate increases). Obligations: >DesignUUA >Construction UUA >Operation UUA >LandCouncil >EPA LicenceCouncil >PaymentCouncil >Pre-existing ContaminationCouncil Contract Principals

Gladstone Regional Council 1770/Agnes Water Contract Term

Gladstone Regional Council 1770/Agnes Water >Operate & maintain Councils existing water & wastewater treatment assets; >Upgrade the existing Lagoon treatment system to ensure the effluent is in compliance with EPA standards; >Design & Construct the following new assets (Modification); –Wastewater treatment plant; –Desalination and bore water treatment plant; –1770 Water supply pipes and reservoir; –1770 Wastewater reticulation pipes –Interconnecting pipework to and from water & wastewater assets; and –Overall SCADA control system. >Operations, maintenance and asset renewal for all water & wastewater treatment assets for the Contract Term; >Invited Services in Water outside 1770/Agnew Water region. Contract Scope

Gladstone Regional Council 1770/Agnes Water >Principal:Council have employed Best Practice Operator to deliver assets and operate plants and in UUA’s area of responsibility UUA will take the responsibility. >UUA will at its own cost and risk: –Design; –Construct; –Operate; and –Repair maintain each Facility so that it can provide the Services to at least the Quality Standards. >Without limitation UUA accepts the risk ….. whether or not this agreement refers … unless the Council expressly agrees to bear that risk; >UUA shall perform the obligations in accordance with the Minimum Standards and this agreement on the basis of their Submission. Contract Responsibilities

Gladstone Regional Council 1770/Agnes Water >Design & Construct – Fixed Priced Milestone schedule –Milestone Completion; –Design Certification; >Start-Up Operations - Toll –Existing Lagoon Toll (Fixed monthly) –Existing Water Toll (Fixed and Variable). >Technical Completion –Design Certification; –Compliance Testing; –Step performance increase –Toll increases >Operations - Toll –Wastewater Toll (Fixed and Variable); –Water Toll (Fixed and Variable); –Asset Replacement (Fixed annual); –Pre agreed escalation Formula. Contract Payment

Gladstone Regional Council 1770/Agnes Water >Warranties attained >Security Deposit >Security reduces following Commercial Acceptance i.e.: –Commissioning –Process Stabilisation –Technical Completion –40 day on load wastewater compliance test with 24 hour sampling and continuous conformity –30 day on load water compliance test with 24 hour sampling and continuous conformity >Liquidated Damages –Desalination Plant –Wastewater Plant –1770 water & wastewater pipelines Security and Liquidated Damages

Gladstone Regional Council 1770/Agnes Water >Technical Completion: –UUA warrants that Plant will meet new Quality Standards –The New Toll applies –Toll abatement applies –40 and 30 day performance test to achieve Commercial Acceptance >Toll Abatement: –Pre-determined % reduction in Toll –Maximum is 20% of monthly Toll –Abatement is to maximum % for single event Performance and Toll Abatement

Gladstone Regional Council 1770/Agnes Water Performance Requirements - Wastewater

Gladstone Regional Council 1770/Agnes Water Performance – Existing Wastewater

Gladstone Regional Council 1770/Agnes Water Performance Expectation – Wastewater

Gladstone Regional Council 1770/Agnes Water Performance Requirements - Water

Gladstone Regional Council 1770/Agnes Water Performance Requirements - Water

Gladstone Regional Council 1770/Agnes Water Performance - Existing Water Dr. Julian Catmull and Dr. Michael ten-Lohuis Enviro-Check Enterprises Pty Ltd Friday, 18 April :08 PM

Gladstone Regional Council 1770/Agnes Water Water Supply - Trench “Although raw water that is not currently in use, I think the result is significant because this potential water source has levels of E.coli and faecal coliforms similar to sewage. Perhaps there are dead animals somewhere in this body of water? I would certainly not recommend using this water as a source for your potable water plants.” Dr. Julian Catmull and Dr. Michael ten-Lohuis Enviro-Check Enterprises Pty Ltd Friday, 18 April :08 PM

Gladstone Regional Council 1770/Agnes Water Performance Expectation – Water

Gladstone Regional Council 1770/Agnes Water Capital Costs Project ComponentRevised Project Costs Subsidy Offer* Desalination Plant$24,871,314$19,948,525 Sewer Treatment$6,849,110$3,265,376 Reticulated Water Supply 1770$1,368,145$1,270,000 Low Pressure Sewerage$3,883,800$1,635,000 Contract Supervision$2,063,806$825,523 Supply and Install Sewer Pipe$718,271- TOTALS$39,754,446$26,944,424 Normal Qld Position40% Outside Queensland0%

Gladstone Regional Council 1770/Agnes Water Sources of Capital Funding >Water Headworks:$1,367,720 >Sewer Headworks:$1,239,660 >Reserves:$882,000 >Borrowings:$9,320,642 >Subsidy:$26,944,424 (including developer contribution repayment).

Gladstone Regional Council 1770/Agnes Water Operating Costs >Fixed and variable components (Toll). >Detailed financial model assessed by Queensland Treasury Corporation. >Estimated operating cost of the IWS in 2008/09 is $557K, stepping up to >$1M in 2009/10 as the system comes on-line and then costs level out. >Scheme operates at deficit position until about Year 7 when it returns positive cash flow. >Deficit funded by borrowing from Council reserves.

Gladstone Regional Council 1770/Agnes Water Date Action Required WhoAction RequiredAction Complete (Enter Date) Clause At least 3 weeks before the Commence ment Date OperatorGive the Council a written estimate of the quantity of operational chemicals required so that the Operator can operate and maintain each existing Facility for the first 4 weeks. Annex 2 Pt 1 1.6(b) Prior to the Commence ment Date OperatorDevelop a ‘Site Security Plan’ for each Site and take responsibility for controlling and securing all Sites. Annex 1 Pt Prior to the Commence ment Date OperatorNominate any Contamination identified as a Pre-existing Contamination. Annex 1 Pt Prior to the Commence ment Date OperatorAssess the condition of each Site and prepare and deliver to Council a ‘Site Condition Report’ including a photographic record. Annex 1 Pt Prior to the Commence ment Date OperatorProvide to the Council:  its 'plant operating procedures';  a planned 'asset management system';  plant 'monitoring' and 'reporting' regimes; and  supply contracts for plant consumables. Annex 2 Pt Prior to the Commence ment Date OperatorAppoint and relocate the Operations Manager.Annex 2 Pt Contract Activities – Start Up

Gladstone Regional Council 1770/Agnes Water 1.Long term Design, Build Operate Contractor 2.Contract is with the Operator (UUA) not designer or builder 3.Contract style has been very successful in delivering exceptional outcomes for Councils (Noosa for example) 4.Contract is essentially a fixed price contract with pre-agreed escalation clause 5.Council has engaged Best Practice Operator for services at 1770/Agnes Water with ability to use these services outside this geographic area 6.Design & Construction payments are for pre-agreed and delivered milestones 7.Contract is performance based with payment abatement for non-compliance 8.Asset life is guaranteed throughout the Term of the Contract 9.At the end of the Term the Contract provides for managed Handover 10.High level of State Subsidy Contract Summary

Gladstone Regional Council 1770/Agnes Water Queensland Level Eagle Street Brisbane QLD 4000 Australia t f Victoria Level Flinders Lane Melbourne VIC 3000 Australia t f

Gladstone Regional Council 1770/Agnes Water >UUA warrants the design, the construction and the operations; >Council does not warrant or represent the Submission, Design Documentation, Works or Facilities O & M; >UUA acknowledges that Council has relied on its representations and warranties. Representations and Warranties

Gladstone Regional Council 1770/Agnes Water >Sole assumption of Risk: –Design and Construction UUA –OperationUUA >Defects apply to Design as well as Construction: –To be rectified by UUA at any time –May or may not be subject to Notification >Onus of Proof: –Onus of proof is on UUA as Agreement assumes guilt until proven innocent Risk, Defects and Onus of Proof

Gladstone Regional Council 1770/Agnes Water Bore performance

Gladstone Regional Council 1770/Agnes Water Contract Activities