Water Meters

The Hon. J.M. GAZZOLA (14:38): Well, truth is a defence. My question is to the Minister for Water and the River Murray. Minister, will you update the chamber on the new technology in metering processes for measuring water usage in South Australia?

The Hon. R.I. Lucas: The minister will say that's a wonderful question.

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (14:38): I thank the honourable member for what the Hon. Mr Lucas has just defined as a fantastic and wonderful question. I can only concur with him in that regard. Just to defend myself in relation to your comments, sir, I am not sure that I actually called the Hon. Mr Ridgway 'stupid'. I said he had a stupid question, and that is a different sort of reflection altogether. Back to the question asked by the Hon. Mr Gazzola—

Members interjecting:

The PRESIDENT: Order! The minister is on his feet. Allow him to answer the question.

The Hon. I.K. HUNTER: Thank you, Mr President, for your protection from this unruly lot today. With technology constantly changing in the area of metering, we have an obligation to ensure that the processes we adopt are appropriate and provide the best outcome for consumers. We also have a responsibility to ensure that they are economically viable. There has been a great deal of discussion regarding smart water meters in recent times. As opposed to traditional meters that are read manually, smart meters have digital communication technology that records water usage at short intervals and sends data automatically to the water retailer.

There have been several trials and studies carried out around the country in respect to the widespread use of smart water meters. Here in South Australia we can benefit from the results of these trials and make some informed decisions. An independent report prepared by Deloittes summarises the findings of the most extensive and comprehensive customer engagement program carried out by SA Water to date. The results show that while many customers see the value of smart water meters in theory they are concerned about the costs involved—and they should be.

In Western Australia, for example, a two-year pilot was conducted, I am told, which saw almost 28,000 smart meters installed in the Kalgoorlie-Boulder region. In November 2013 the chiefs of the Western Australian Water Corporation told the Western Australian parliament that they were never likely to see a return on investment from the rollout of smart water meter meters. On 14 November 2013 The West Australian newspaper reported the Water CEO, Susan Murphy as saying:

One of the problems is that the water you save will never pay off the extra cost of the meter in the life of the meter.

Trials undertaken in Victoria have also failed to generate a positive business case for the widespread rollout of smart water meters. These findings are echoed in the Essential Services Commission of South Australia draft report from July 2014 entitled Inquiry Into Reform Options for SA Water's Drinking Water and Sewerage Prices.

As part of the inquiry, ESCOSA undertook a cost-benefit analysis of the large-scale installation of smart meters. In line with the results of other similar studies, ESCOSA clearly found that the costs of mandatory smart water meters outweigh the benefits to customers. To be precise, the estimated cost of requiring all properties to have smart meters could exceed the benefits by up to $170.5 million in net present value terms over 25 years. Based on this assessment ESCOSA recommends that the status quo should be maintained with respect to smart meters; that is, smart water metering should remain optional.

This was also reflected in the numerous submissions received by the ESCOSA inquiry, including SA Water, the Landlords Association and Business SA, who all cautioned that the benefits of a wide scale rollout might not outweigh the costs. This appears to be a very prudent recommendation, especially given the fact that there are still question marks over this very new technology and, of course, we will watch this space into the future.

For example, SA Water has found that smart water meters are no more accurate than the current technology, smart water meters cost more and appear to have a shorter life expectancy than mechanical meters, and they require an extensive and costly communications network, making the ongoing operational costs higher than manual meter reading.

While it is clear that the costs of smart water metering far outweigh the benefits at a whole-of-state level there may be some properties and large-scale water customers who could benefit from it, and SA Water, as always, being in tune with its customers' needs, is responding to this need of a large-scale water customer. Smart meters allow for real-time downloading of data, and this means that demand can be evaluated more efficiently and leaks can be identified and repaired more quickly, for example. The more detailed data can provide valuable information for large-scale water users regarding patterns of water use.

This is why SA Water is establishing a pilot program involving a limited number of major customers who have privately invested in smart metering equipment. The evidence at the moment is quite clear: the benefits of a statewide rollout of smart water meters are clearly not good enough or great enough to justify the expense and, therefore, here in South Australia we will listen to the experts and leave smart meter technology for those large water consumers who want to avail themselves of it.