Marsden Jacob Associates - Economic and Financial Consultants

In July, we reported that MJA had recently completed an analysis of the economic value of the Gnangara Mound groundwater in Western Australia, for the Department of Water (WA).

The study will now be expanded, at the request of Department of Water (WA), to include a discussion on water use by pine plantations and native banksias, which also impact on groundwater levels across the Mound.

Financial and economic advice on efficient use of irrigation water

August 2006

Marsden Jacob continues to provide extensive advice across Australia, and the Murray Darling Basin in particular, to promote efficient use of irrigation water.

During August, MJA:

is providing advice to Murray Irrigation Limited on the development of a transparent method for calculating the avoided costs of distribution infrastructure restructuring
has completed the preparation of a business case for the Coleambally Water Smart Australia project - a project to modernise the irrigation system in the Coleambally Irrigation Area
is undertaking an audit of the water balance and water savings in the Central Goulburn 1-4 open channel automation project for Water for Rivers
is investigating water trading opportunities for Central Highlands Water
is providing advice on water trade exit fees to Murray Irrigation Limited, Coleambally Irrigation Cooperative Limited and a number of NSW joint water supply districts
is preparing a business case for the Shepparton Irrigation Area Modernisation Project for Goulburn-Murray Water and the Department of Sustainability and Environment

Third party access to water and sewerage infrastructure

July 2006

In late 2005, Marsden Jacob Associates provided the Department of Agriculture, Fisheries and Forestry with a research paper titled Third Party Access in Water and Sewerage Infrastructure: Implications for Australia. This paper has now been released.

An important element of the review was the collection of water industry views on the role of private infrastructure providers. The report included both interviews with key stakeholders and a survey of water industry participants through the Australian Water Association.

Download MJA's paper, and additional analysis on Water Reform and the Urban Sector, from the Department of Agriculture, Fisheries and Forestry website:

Water Reform and the Urban Sector
http://www.daffa.gov.au/natural-resources/water/reform/urban (external link)

Water trading and entitlements in Western Australia

July 2006

Marsden Jacob Associates recently provided advice to the Government of Western Australia, on progressing reform in the WA water sector. The Marsden Jacobs paper was titled Water Entitlements, Water Plans and Trading for Western Australia. As part of the reform process, the Government has now released its discussion paper, A Draft Blueprint for Water Reform in Western Australia. This paper draws on advice provided by Marsden Jacob Associates on issues relating to water entitlements and trading.

Download Marsden Jacob's paper:

Water Entitlements, Water Plans and Trading for Western Australia
PDF: 1.03 Mb / 107 pages

Download the Government of Western Australia's discussion paper:

A Draft Blueprint for Water Reform in Western Australia
PDF: 0.45 Mb / 72 pages (external link)

MJA to lead climate impacts assessment project

July 2006

MJA, at the head of a multidisciplinary team, has been successful in receiving funding from the Australian Greenhouse Office and Department of Sustainability and Environment (Vic) to undertake an Integrated Assessment of Climate Change Impacts on Settlements in the Western Port region of Victoria. The team will include the Western Port Greenhouse Alliance (WPGA), CSIRO, the Regional Development Company and Broadleaf International.

The Western Port region is located to the south east of Melbourne and borders both Phillip and Western Port Bays. It encompasses urban and other coastal settlements and Melbourne’s major SE growth corridor. The new study will build on earlier work just completed for the WPGA that identified strategic directions for responding to climate change in the region. The study will examine the impacts of climate change on urban infrastructure and on housing and accommodation.

Gnangara Mound Groundwater Values

July 2006

MJA has recently completed an analysis of the economic value of the Gnangara Mound groundwater in Western Australia.

The analysis was undertaken for the Department of Water (WA), as a first step to appreciating the value of the Mound, the ecological and economic systems it supports, and potential losses if timely corrective action is not taken.

Economic values across the major consumptive uses of Gnangara groundwater were examined, including public drinking water supply, garden bores, industrial, and agricultural uses. The study demonstrates the substantial economic value of the Mound and the activities, industries, communities and individuals it supports.

Climate change and risk management

July 2006

Dr John Marsden completed a series of workshops on risk management and climate change, alongside Broadleaf International, for the Australian Greenhouse Office (AGO). The AGO has also published a guide Climate Change Impacts and Risk Management - A Guide for Business and Government, developed by MJA and Broadleaf.

Download Dr John Marsden's presentation:

Climate Change: Managing the Risks
PPS: 5.89 Mb / 22 pages

Download the the AGO's guide from their website:

Climate Change Impacts and Risk Management - A Guide for Business and Government
http://www.greenhouse.gov.au/impacts/publications/risk-management.html (external link)

Discounting the future?

June 2006

Dr Tony Hand and Phil Pickering recently spoke at the Sustainable Water in the Urban Environment Conference. Their presentations examined a number of concerns raised about discounted cashflow analysis (often referred to as Net Present Value or NPV analysis) on non-conventional water solutions, including:

whether, and to what extent, discounting is appropriate for long-term costs and benefits in light of sustainability concerns
whether water 'demand' or environmental benefits should be discounted in levelised cost calculations
the appropriate level of pricing to encourage efficient investment in non-conventional water solutions
incorporating environmental and social factors into a broader evaluation of projects

MJA Senior Economist Presents Paper at World Bank Workshop

June 2006

The joint paper, titled 'Can technology and institutions make cost-recovery work better in irrigation and drainage projects?', was presented by MJA senior economist, Mark Nayar on 9 June, 2006. The workshop was organised by the World Bank's Agricultural and Rural Development 'Water for Food' team, and was held in Washington DC.

LNP Exemption Granted to Hutchison

May 2006

The Australian Communications and Media Authority (ACMA) has granted Hutchison Telecommunications Australia Limited (Hutchison) an exemption from the requirement to provide local number portability (LNP) in respect of its LocalZone service.

MJA assisted Hutchison (on behalf of Allens Arthur Robinson) with issues related to the Long Term Interest of End-users (LTIE). We concluded that an investment in LNP could not be regarded as efficient and that an LNP exemption for the LocalZone service was in the LTIE.

See ACMA's media release:

ACMA grants local number portability exemption for LocalZone service
http://www.acma.gov.au/ACMAINTER.65646:STANDARD::pc=PC_100553 (external link)

Review of Cost of Capital for Transpower, NZ

May 2006

MJA has been retained by Mighty River Power in New Zealand, to review the cost of capital for Transpower's Grid Upgrade Proposals (GUPs).

Under the Electricity Governance Rules, Transpower - New Zealand's state-owned national grid operator - can seek approval from the Electricity Commission (EC) for Grid Upgrade Proposals (GUPs). Approval by the EC entitles Transpower to recover the cost of the upgrade from its customers (such as Mighty River Power). The main part of the EC’s consideration of Transpower’s GUPs is application of a Grid Investment Test (GIT). Under the GIT the EC does a quantitative evaluation of the GUP against alternative projects. The EC must use a discount rate that is either (i) determined by the EC for the purposes of the GIT; or if the EC has not determined a discount rate, a discount rate of, or equivalent to, a pre-tax real rate of 7%.

MJA's review will consider the appropriate weighted average cost of capital (WACC)/discount rate for Transpower’s GUPs.

MJA to Present Workshops on Climate Change and Risk Management

May 2006

Dr John Marsden, Director of MJA, will lead a series of workshops around Australia, throughout May and June, on Climate Change and Risk Management.

Marsden Jacob Associates and Broadleaf International were commissioned by the Australian Greenhouse Office (AGO) to produce a guide for business and government on managing the risks of climate change. The Guide is to be launched in early June 2006. These workshops will provide an overview of the Guide and its purpose, and will include speakers from Broadleaf International and CSIRO.

The workshops provide a timely opportunity for company directors, senior managers and specialist risk managers to begin the process of identifying and prioritising the risks of climate change for their organisations.

Workshops will be held in every Australian capital city, between 30 May to 14 June.

Update on mobile termination in New Zealand

May 2006

On 1 May, the New Zealand Communications Minister David Cunliffe released a Commerce Commission report on regulation of mobile termination rates. The Commission's reconsideration final report recommends regulation of voice calls made from fixed home or business phone lines to all mobile networks, including those using 3G technologies.

The report discusses recent advice provided by MJA to TelstraClear on the cost-benefit analysis used by the Commerce Commission to evaluate the effect of regulating mobile termination. The conclusions reached by the Commerce Commission in its final report are in-line with advice provided by MJA to TelstraClear.

Phil Pickering and Jim Binney join the MJA Team

April 2006

MJA is pleased to announce the addition of two senior economists to our team of consultants.

Phil Pickering is an economist and pricing specialist with extensive experience in the water industry. As the Manager Pricing for Western Australia's Water Corporation, he was responsible for developing and implementing policies on water industry tariffs, developer contributions, bulkwater transfer charges and regulated revenue targets.

Jim Binney is a resource economist with over 20 years experience in the public sector and finance industry. Jim's most recent role was Director of Economics for the Queensland Department of Natural Resources, Mines and Water.

Cost Allocation Works Compensation

April 2006

The Essential Services Commission is currently reviewing charges levied on self-insuring employers by the Victorian WorkCover Authority. Marsden Jacob Associates is advising the Self Insurers Association of Victoria in this review.

SIAV members comprise the 39 largest private sector employers in the State. The dispute on the allocation of the Authority’s common costs, such as for governance, courts and tribunals advertising and awareness raising, is long standing and material. Looking forward around $40 million is at stake over the next 5 years. For the ESC review, SIAV is being advised by Nerida Wallace of Transformation Management, Julie Evans actuary and Marsden Jacob.

Download the submission from ESC website :

A submisson to the Essential Services Commission on behalf of SIAV
PDF: 0.31 Mb / 47 pages (external link)

AGO Risk Management Framework for Risks Related to Climate Changes

April 2006

Marsden Jacob and its associates, Broadleaf Capital, are completing a framework for the assessment and management of the risks associated with climate change. This framework, developed for the AGO is focussed primarily on initial strategic assessments. The Guide describing this framework is directed to:

elected representatives and directors who wish to ensure their organisations are aware of their risks from climate change and that suitable management responses and treatment are put in place
general management of organisations who need to understand the nature of the risks associated with climate change and to know that these are identified and incorporated into the firm's processes for management and strategic planning
specialist risk managers or external risk experts who must apply risk management frameworks to ensure their organisations or those they are advising have identified and considered the risks of climate change.

Mobile termination in Australia

March 2006

On 30 March, the Australian Competition and Consumer Commission (ACCC) announced its final decision in relation to the Vodafone access undertaking to supply its Mobile Terminating Access Service on its second generation GSM network. The ACCC has rejected this undertaking because it considers that the terms and conditions contained within it are not reasonable. MJA has, on behalf of Hutchison, provided a detailed submission to the ACCC in this matter. The ACCC's final report, MJA submissions, and other documentation relevant to the access undertaking is available on the ACCC website.

Local Loop Regulation: Australia

March 2006

Marsden Jacob is reviewing, on behalf of the Competitive Carriers Coalition, Telstra's PIE II model for the purposes of determining the Total Service Long Run Incremental Cost (TSLRIC) of providing the Unconditioned Local Loop Service (ULLS). This review and critique will build on our experience with and insights gained in examining and building cost models in other jurisdictions.

Mobile termination in New Zealand

February 2006

Marsden Jacob has provided on-going submissions to the New Zealand regulator, the Commerce Commission (CC) on behalf of Telstraclear, in the CC's investigation of regulation of mobile termination. A number of submissions have been prepared including most recently an analysis of earlier submissions by Vodafone and Telecom on the CC's Cost Benefit Analysis.

South East Queensland : Western Corridor Recycling

February 2006

Marsden Jacob Associates has completed its advice to the office of the Coordinator General on the economic and financial analysis of the Western Corridor recycling option. This advice also included a detailed risk assessment of the use of recycled water in the power stations.

Redefining WA's Water Entitlements and Establishing Trading Arrangements

February 2006

The WA Department of Water has appointed Marsden Jacob Associates to draft the discussion paper setting out the options for a new system of water entitlements and for trading arrangements.

Shortcomings in existing arrangements highlighted in the 2005 Irrigation Review included the 'use it or lose it' policy and the very short duration of existing water licences. Since most Australian thinking on water entitlements and trading is dominated by the situation and experience of the South Murray Darling Basin, the challenge is to devise a system of entitlements and trading which recognises the different situation of WA's water resources and water use.

Marsden Jacob Associates' advice will build upon previous advice by MJA principals including:

Water Trading Monitoring and Development prepared for the NWS Department of Land and Water Conservation
National Principles for Water Trading prepared for the High Level Steering Group on Water
Retail Entitlement Reform for Goulburn Murray Water
development of Water Resource Planning and Resource Operations Plants in the Fitzroy Basin of Queensland

Peak Summer Energy Use and Electricity Distribution

December 2005

Dr Jeff Washusen, principal of MJA and head of MJA's Energy Regulation practice, provided a briefing to the Energy Users Association of Australia, summarising the impacts of extreme peak summer energy use on electricity distribution businesses.

The briefing focussed on the increasing impact of residential air conditioner use, which has continued unabated for more than a decade and shows signs of significant further growth potential right across Australia. The briefing also highlighted areas where government energy efficiency initiatives have produced unintended outcomes; and areas where government and regulatory policy still needs to be addressed.

See the Samples of Work section of our website for further information, and to download slideshow.

QLD Office: Change of address

December 2005

MJA's Brisbane office has moved into the city. We are now located at:
Level 5, 100 Eagle St, Brisbane
Our new telephone number is (07) 3229 7701.

See the Contact Us page for further details.

ERA: Esperance - Kalgoorlie Pipeline

May 2005

The Economic Regulatory Authority of Western Australia has appointed MJA to review alternative supply options for the Kalgoorlie-Boulder area and the broader region.

The review is commissioned in response to the proposal by United Utilities Australia to build a desalination plant at Esperance for piped supply to Kalgoorlie and mines and mining towns along the pipeline route. The base case is to extend and upgrade the existing pipeline for supplying the Goldfields and Agricultural Water Supply Scheme.

Third Party Access in Water

May 2005

MJA has been appointed by the Australian Department of Agriculture, Fisheries and Forestry to identify issues, understandings and attitudes relating to Third Party Access in water.

In addition, the study will survey the opinions, expectations and concerns of key decision makers in the water industry and undertake a broader survey of water industry professionals. This wider survey will be undertaken with the support and assistance of the Australian Water Association.

Guidance for Integrating Climate Change Impacts into Risk Management Practices

May 2005

MJA has been engaged by the Australian Greenhouse Office to provide practical guidance to Australian decision-makers in businesses and agencies on the integration of climate change into their organisations’ risk management practices. . MJA is supported in this work by Broadleaf Capital International and Dr James Risbey of Monash University.

The prime outcome of the project will be a general guide to applying existing risk management frameworks to enable the changed profile of risks due to climate change to be identified and managed and opportunities captured though effective adaptation. As required by the project brief, the application of risk management principles to Australian climate change assessment will be consistent with the Australian and New Zealand Standard AS/NZ 4360:2004.

An important aspect of the project will be the use of a number of case studies to test and illustrate the application of the risk management guide to specific tangible examples. The support of four ‘case study partners’ has been secured to assist with development of the case studies. These are:

Department of Primary Industries and Fisheries, Queensland (agriculture)
United Energy (electricity and gas);
Water Corporation, Western Australia (water); and
Rockhampton City Council (local government).

The Guidance document will be generically developed for application across a wide range of sectors and regions. To assist future users with the tasks of identifying and assessing risks it is important that they have access to the best available climate science information, including plausible scenarios of future climate. Plausible climate scenarios will also be useful for testing application of the climate focussed risk management guidelines in the case studies.

To that end, a ‘science workshop’ was conducted on 18 May 2005 with a number of climate science experts from CSIRO, the Bureau of Meteorology, other government agencies and academic institutions, as with representatives from the case study partners and the AGO. The principal objectives of the workshop were to:

elicit from the climate experts a concise representation of plausible climate scenarios (average temperature and rainfall) for different regions in Australia, with an emphasis on pushing scenario boundaries;
assign estimates of likelihood to those scenarios; and
examine the implications of the scenarios for climate extremes and impacts including storms, extreme rainfall and extreme temperature.

With the successful completion of the workshop, the next stages of the project - development of the Guidance document and testing of the guide through the case studies – will now commence.

RUWA Response to ESC Draft Decision on Developer Charges

April 2005
MJA has completed a paper on behalf of Victoria's Regional and Urban Water Authorities in response to the Victorian Essential Services Commission’s Draft Decision on Developer Charges (termed ‘New Customer Contributions’ by the ESC).

The ESC’s Draft Decision recommended three options on New Customer Contributions:
a) that they be restricted to forward-looking costs only;
b) that they be set at an arbitrary $500 per lot; or
c) that they be abolished altogether.

In reaching these draft conclusions, the ESC relied on three principles from the Water Industry Regulatory Order (WIRO). MJA's paper reviews the evidence available against each of these three principles and concludes that either the ESC has not considered the full range of evidence, or it has been selective in the application of the principles. The paper therefore requests that the ESC reconsider its Draft Decision.

One issue not considered is the role of NCCs in an incentive structure designed to encourage developers to adopt Water Sensitive Urban Design (WSUD). This is particularly important because the experiences of Western Water in Victoria and Gold Coast Water in Queensland suggest that developers are highly responsive to such incentives and the scope for water conservation is dramatically larger at the development stage that it is once developments and homes have been built. A second issue concerns equity, particularly in small coastal towns, and the extent that existing residents should be required to pay for major capacity upgrades necessitated by the arrival of the ‘sea-changers’.

MJA's report is one of three major papers on the topic, submitted by the Water Services Association of Australia (WSAA), VicWater, and the Regional Urban Water Authorities. MJA's lead consultants for this work were John Marsden and Kym Whiteoak.

WaterCare (NZ) Review of Funding Plan

April 2005

The Shareholders Representative Group (SRG) has requested MJA, in association with ABN Amro, to review the 2005-6 Funding Plan submitted by WaterCare. The review is focussed on the funding strategy and the role of credit ratings, coverage ratios and debt levels in influencing the price paths, intergenerational equity and allocations between the water and wastewater businesses. MJA undertook a similar review for the SRG in 2001.

Kym Whiteoak joins MJA Team

March 2005

MJA is pleased to announce that Kym Whiteoak has joined our team of consultants.

Kym is an environmental economist and recent graduate from a Masters course in Environmental Management from the Australian National University. He has training and experience in non-market evaluation techniques, cost-benefit analysis, econometrics, survey design and statistical analysis.

Kym was previously employed at the Australian Bureau of Statistics and has worked in Vietnam as a project economist on the Australian Youth Ambassadors for Development program.

Investigating the Feasibility of Water Trading to Satisfy Water Resource Demands in Central Queensland

March 2005

MJA has been retained by the Queensland Department of Natural Resources and Mines to examine key aspects of water trading in Central Queensland. This will focus on the Nogoa-Mackenzie Water Supply Scheme, a source for industrial and urban water supply needs within the Central Queensland Regional Water Supply Study area.

The project will determine the extent that water trading between sectors is likely to satisfy demands, in particular from agriculture to industry/urban, and identify the drivers for water trading. Potential constraints to trading will be examined, including any constraints arising as a result of the current Fitzroy Resource Operations Plan rules. Other possible constraints to be examined include economic circumstances, allocation holder behaviour and understanding, and institutional arrangements. The project is also to highlight any key social impacts arising from the likely level of trading.

The lead consultant for this project is Dr Tony Hand, principal of MJA’s Brisbane Office.

Review of Fiji Islands Fisheries

March 2005

Dr Tony Hand, principal of MJA’s Brisbane Office, acted as Team Leader for a comprehensive review of the Fiji Islands Fisheries Sector. The main objectives for the review were to conduct diagnostic assessments of fisheries management performance and to evaluate the institutional framework and legislative settings for fisheries management in Fiji. Conducted between November 2004 and March 2005, the review was funded by the Asian Development Bank (ADB).

A detailed reform program was set down by the review team. Dr Hand is currently assisting the ADB and the Fiji Islands Government in establishing the necessary processes and funding arrangements required to implement the program.

Update: Services Sydney application for declaration of Sydney Water’s sewerage infrastructure

February 2005

With the expiry of the 60 day period for consideration by the NSW Government, the Premier is deemed to have rejected the advice of the National Competition Council to grant declaration for access to Sydney’s sewerage network by Services Sydney. Services Sydney has announced that it will now appeal to the Australian Competition Tribunal.

Relevant information on the NCC's website can be viewed by following this link. The Council’s Final Recommendation (February 2005) in favour of Services Sydney’s application to have Sydney’s sewerage services market opened to private competition can be viewed here.

Services Sydney’s application was Australia’s first application and draft approval of common carriage for sewerage under Part 3A of the Trade Practices Act. In 2004, MJA assisted Services Sydney in its application for declaration for the purpose of Third Party Access of Sydney Water’s sewerage network. MJA provided economic advice in a submission on behalf of Services Sydney to the NCC, which can be viewed here.

Andrew Osborne joins MJA Team

February 2005

MJA is pleased to announce that Andrew Osborne will be joining our team of consultants from March 2005. Andrew brings more than 33 years engineering experience working with public and private sector clients in the management of the total water cycle, incorporating delivery of capital infrastructure, strategic and institutional studies and project arranging. Andrew was previously General Manager of Earth Tech’s Business Solutions Group.

He has worked around Australia and internationally, including assignments in the UK, Iraq, New Zealand, China, Thailand and Indonesia. Andrew holds a Masters of Engineering Science from the University of Melbourne and has several published papers.

Queensland Competition Authority - LRMC

December 2004

MJA has completed a study for the Queensland Competition Authority into various methods for calculating the Long Run Marginal Costs (LRMC) for water services. This included a review of the theoretical and practical issues related to the estimation of LRMC according to different costing methodologies and international experience in the implementation of LRMC.

MJA's report is now publicly available from the QCA website. MJA's lead consultants for this work were Peter Jacob and Jasper Mikkelsen.

Economic issues relevant to costing the impacts of climate change

December 2004

MJA has recently completed work for the Australian Greenhouse Office examining methodological and other issues relevant to assessing the economic cost of the impacts of climate change in Australia.

The report examines a range of economic assessment techniques and tools. Key methodological issues are covered, such as dealing with risk and uncertainty, discounting and the assessment of distributional effects and non-market values. It also includes a number of small case studies.

MJA's lead consultant for this work is Peter Kinrade. MJA's report may be viewed at the AGO's website.

Economic and financial review of cremation industry

December 2004

MJA has finalised a major review of the financial viability of the Victorian cremation industry for the Department of Human Services (Vic). The project involved extensive financial modelling and spatial analysis to provide the Department with information to underpin its planning processes, including evaluation of proposals for construction of new crematorium facilities in Victoria.

The MJA team investigated the drivers of demand for cremation services and their impact. Using data from the ABS and the Registry of Births, Deaths and Marriages, a comprehensive forecast was developed of Victorian death rates and demand for cremation to 2051. The supply of cremation services was also examined, including current patterns of supply for each crematorium.

Cost and capacity utilisation data was collected via on-site visits to all Victorian Cemetery Trusts with crematoria. This was used to develop a 50 year cash flow spreadsheet model to simulate the viability of individual crematoria and the Victorian industry as a whole. Key cost and profit drivers were investigated using a structured sensitivity analysis. As a comparison, the report presents indicative figures from a range of other jurisdictions around Australia and overseas. Finally, a detailed market analysis was undertaken to investigate the viability of potential new crematorium sites at selected locations around the state.

The MJA-led consortium was engaged by DHS through publicly advertised tender, and included Spatial Vision, geospatial and information technology specialists, and Cumpston Sarjeant Truslove, consulting actuaries. MJA's lead consultants for this work are Chris Tikotin and Philip Jones. Further information regarding Victoria's death care industry is available at the DHS Cemeteries Crematoria website.

TelstraClear – Economic regulation of telecommunications

November 2004

MJA has completed two reports for TelstraClear in New Zealand:

A review of the Commerce Commission's cost-benefit analysis of fixed to mobile termination.
The appropriateness of TSLRIC for regulation of mobile termination.

Both reports were submitted to the Commerce Commission (New Zealand) in relation to their investigation into whether mobile termination should become a designated service.

MJA’s lead consultants for this work are Dr John Marsden and Jasper Mikkelsen.

IPART - Review of State Water expenditure proposals

November 2004

MJA has been retained by the Independent Pricing and Regulatory Tribunal of New South Wales to conduct a review of NSW State Water's expenditure proposals for the regulatory period from 2005/06 through 2008/09.

State Water is a newly corporatised entity with responsibility for the delivery of bulk irrigation water across the whole of NSW. The review will include an audit of State Water's asset management systems as well as an assessment of the efficiency of recent and proposed capital expenditure and operations and maintenance expenditure.

MJA's lead consultants for this work are Dr Jeff Washusen, Mark Nayar and Jasper Mikkelsen. MJA has been joined by Cardno MBK for this review. Cardno's lead consultant is Bevan Faulkner, who brings substantial practical experience and expertise in irrigation system asset management and operation.

Upper Murrumbidgee transmission losses study

October 2004

MJA has completed an investigation of transmission losses in the Upper Murrumbidgee catchment - that is, the volume of water that would be lost between Tantangara Dam and the ACT from both natural and anthropogenic causes. This study, undertaken for ACTEW corporation as part of the ACT Future Water Options program, examined losses for a range of release scenarios, and a strategy was developed to maximise water use efficiency. The project was lead by MJA with hydrologic analysis undertaken by Fluvial Systems P/L.

Living Murray Water Savings Project

October 2004

MJA has been successful in its application to the Living Murray Infrastructure Projects Program. The application to undertake a feasibility study of Total Channel Control in the Shepparton irrigation district of Goulburn-Murray Water will identify the financial costs of implementation and quantify the volume of water savings achievable. MJA will lead the study with assistance from Fluvial Systems and Ecos Environmental.

Audit of water allocation plan implementation

September 2004

MJA has been commissioned by the River Murray Catchment Water Management Board (SA) to audit the implementation of the River Murray, Angas Bremer and Mallee Water Allocation Plans. The plans set out the environmental conditions under which licensed users can take and transfer water. Implementation of the plans is undertaken by the South Australian Department of Water, Land and Biodiversity Conservation. A final report is due in December 2004.

PTS - LRIC modelling for fixed telecommunications network

September 2004

MJA is currently assisting the Swedish telecommunications regulator PTS (Post och Telestyrelsen) with an update of their Long Run Incremental Cost (LRIC) model for the fixed network. The model calculates the forward-looking costs of interconnection services, unbundled local loop, shared access and various co-location services. Following public consultation in October and November, the model will be finalised and prices published in December 2004. MJA's lead consultant for this work is Jasper Mikkelsen.

TelstraClear - Economic regulation in NZ Telecommunications Industry

August 2004

MJA has completed three reports for TelstraClear in New Zealand:

The cost of capital for a mobile operator
The cost of capital for telecommunications service obligation services
Allocation of the net costs of the telecommunications service obligation.

The first report was submitted to the Commerce Commission in relation to their investigation into whether mobile termination should become a designated or specified service. The latter two where submitted as a response to the Commission's Draft Determination for TSO Instrument for Local Residential Service for period between 1 July 2002 and 30 June 2003. MJA’s lead consultants for this work are Dr John Marsden and Jasper Mikkelsen.

Common price regulatory issues for RUWAs - update

August 2004

In the process of the first price regulatory review, MJA is providing a series of advice to the Rural Urban Water Authorities (RUWAs) which supply water to regional centres and rural towns.

Submissions to the Essential Services Commission included a letter and the paper Regulatory Treatment of Risks and Risk Management for the Victorian Regional Urban Water Authorities (June 2004).

Following submission of this paper, the ESC has accepted the necessity of looking at long-term financial viability for the rural urban water businesses and has amended its information template to extend the period of forecast information from 10 years to 30 years. The ESC is also preparing to undertake cash flow analysis and financial ratio analysis.

Further submissions to the ESC included a letter and the paper A Developer Charges Approach for RUWA Water Plans (August 2004).

MJA has also provided extensive assistance to individual RUWAs in the preparation of their Water Plans for submission to the Minister and to the ESC. This assistance has included:

drafting the Water Plan
regulatory price modelling
pricing policy advice
tariff analysis and advice, including new Rising Block Tariffs (RBTs).

Data management systems audit for MDBC - update

July 2004

MJA is now finalising a report to the Murray Darling Basin Commission (MDBC) on the audit of diversion measurement and data management systems for the purposes of cap reporting.

MJA was commissioned to undertake this audit and assisted by Ecowise Environmental Ltd in field investigations and the assessment of hydrographic issues and by Rubicon Systems Australia with insights and advice on data systems and related issues.

Such an audit of data management systems on measured diversions has not previously taken place. Although commissioned for the purposes of the MDBC Cap, this audit can be seen as an important first step toward water resource accounting in Australia as foreshadowed by the National Water Initiative. Some background on MJA's data management systems audit for MDBC can be found here.

Jasper Mikkelsen joins MJA team

June 2004

MJA is pleased to announce that Jasper Mikkelsen has recently joined our team as a Senior Economist.

Jasper is specialised in industrial organisation and regulatory economics and has substantial consulting experience in the telecommunications industry in Europe and CIS countries.

His experience includes:

The development of cost models
The design and execution of tender processes, including auctions and "beauty contests"
Strategic advise to telecom operators.

Jasper's appointment offers our clients access to the latest international experience in economic regulation and specialist regulatory advice in telecommunications.

Water auditing services to Water for Rivers

June 2004

MJA has been approved to provide water auditing services to Water for Rivers, the joint government enterprise established by the Commonwealth, New South Wales and Victoria to invest in water savings for the Snowy River and the River Murray.

Water for Rivers will appoint an auditor to each of the water savings initiatives it funds. MJA as auditor to Water for Rivers will undertake the certification and verification of project water savings.

MJA’s lead consultant for this work is Mark Nayar. This complements MJA's ongoing work for the Murray-Darling Basin Commission (MDBC), undertaking an audit of the water resource data management systems in the Murray-Darling Basin states.

Common price regulatory issues for RUWAs

May 2004

MJA has been retained by the Victorian RUWAs (Regional Urban Water Authorities) to provide overview advice on common price regulatory issues in the areas of risk and the cost of capital.

This is a major contribution to the Essential Services Commission’s first price determination for the Victorian water sector.

MJA’s lead consultants for this work are Dr Jeff Washusen and Dr John Marsden.

Economic contribution of public lands for DSE

April 2004

The Victorian Department for Sustainability and the Environment has retained MJA to provide a high level assessment of the direct economic contribution of Victoria’s public lands.

This is a meta-analysis examination of more than 30 individual economic studies undertaken on behalf of DSE over the past decade.

MJA’s lead consultants for this work are Dr John Marsden and Dr Tony Hand.

Data management systems audit for MDBC

April 2004

The Murray-Darling Basin Commission (MDBC) has appointed MJA to undertake the first audit of data management systems for the purpose of the Cap.

The audit covers all aspects of data and information collection for the MDB Cap. This includes metering of flows, estimation of flows, data systems and water trading.

MJA is assisted in the audit by ECOWISE and GIS specialists Spatial Vision.

MJA’s lead consultants for this work are Mark Nayar and Dr John Marsden.

Social and economic impact study of the Darling-Anabranch Management Plan

March 2004

MJA has completed a social and economic impact study for the EIS of the proposed Darling-Anabranch Management Plan (DAMP).

The DAMP project is located in the southern Murray-Darling Basin and envisages the construction of a pipeline to replace the existing open-channel water supply. The project will save a significant volume of water (approximately 47GL/annum) that is currently lost through seepage and evaporation.

MJA undertook a detailed cost benefit assessment of the project including economic assessment of the value of providing environmental flows and the value of water savings.

The full EIS document is available from the NSW Department of Infrastructure, Planning and Natural Resources.

MJA’s lead consultant for this work was Mark Nayar.

Wimmera Mallee Pipeline Project

February 2004

MJA is part of the specialist consortium, led by Connell Wagner, that was appointed to develop the Business Case and detailed design for the Wimmera Mallee Pipeline Project. The Business Case which was submitted to the Victorian Government at the end of November 2003.

The Business Case, which assessed the full range of the benefits and costs of the proposed project, demonstrated a positive ratio of 1.19, with benefits of $637 million outweighing costs of $536 million. The benefits assessed included:

increased environmental water for rivers, wetlands and floodplains, both within the region and more widely through additional flows to the River Murray;
avoided costs currently involved in running the channel supply system;
on-farm benefits from increased productivity and reduced costs;
major economic development benefits from the increased opportunities over the next twenty years to grow major business sectors such as intensive livestock, mineral sands and viticulture;
enhanced recreational values from the provision of more reliable, and larger flows to recreational lakes; and
water quality benefits, from the extended life-span of hot water systems and other appliances currently corroded by the high salinity levels in the water supply.

MJA is now supporting the Project Planning Group in promoting adoption and support for the proposal across Governments both in Victorian and at the Federal level.

The Wimmera Mallee Pipeline Project will be one of the largest water supply projects ever undertaken in Australia. It will involve the installation of 6,000km of pipeline to supply 2,700 commercial farms and 35,000 urban consumers in 40 towns across an area which represents 10% of Victoria. Water savings of 90,000ML will be realised through the pipelining of the existing leaky open channels. These savings will be directed to restoration of the important ecosystems of the Wimmera and Glenelg Rivers and to promote regional development.

Click here for more information on the Wimmera Mallee Pipeline Project.

Developer charges Western Australia

February 2004

The Western Australian Parliament is undertaking an inquiry into developer contributions for infrastructure costs associated with land development. While visiting Melbourne, the Public Accounts Committee consulted with Dr John Marsden, who led MJA’s recent analysis of developer charges for the WA Water Corporation.

The web page for the inquiry can be found here.

Victorian water industry regulation

January 2004

MJA is supporting one of the major Regional Victorian Water Businesses respond to and succeed in the new economic regulatory framework which is being developed and implemented across Victoria.

This new framework involves the transfer of regulation of the water sector to the Essential Services Commission (ESC) and the use of a three year Water Plan as the mechanism to drive future investment and prices.

The proposed approach will provide major opportunities for the sector as it will:

place the onus on the water business to determine the shape of the future through a single whole-of-business Water Plan;
increase clarity on the outcomes which the water business has to meet;
allow the business to take the lead in negotiating compliance requirements with regulators;
promote a transparent process to resolve trade-offs between cost and quality;
allow customer input to this process; and
provide the business with certainty on prices and revenues for a medium investment horizon.

However, there will be a challenging period of transition as responsibility for the sector is handed over from the Department of Sustainability and Environment (DSE) to the ESC. Major elements of the policy environment are still to be clarified through the eagerly awaited White Paper.

A key objective for the water businesses will be to ensure that the new regulatory framework reflects the issues, drivers and challenges of the sector and does not merely apply the same regulatory tools and approaches to water as are currently applied to the energy sector in Victoria or the water sector in the UK.

WA Government appoints MJA to prepare business case for Ord River development

December 2003

The WA Government has commissioned an MJA-led consortium to prepare the business cases for staged and full development scenarios for the Ord River Stage 2 M2 Irrigation Area.

WA State Development Minister, Clive Brown states "the business cases will include a full analysis of development options and market opportunities for suitable crops that would deliver maximum economic opportunities to the Kununurra community, particularly the traditional owners".

The Ord Stage 2 M2 Irrigation Area is located in the Estern Australia's East Kimberley region and extends into the Northern Territory.

Further information (external links):

Find information about the Ord River Irrigation Area.
View a detailed map of the area.
Read the Federal Court's recent Claim Consent Determination (December 2003) regarding the Miriuwung and Gajerrong people in the Kimberley region.

Draft guidelines for planning and reporting water recycling programs

Novermber 2003

MJA was commissioned by the Victorian Department of Sustainability and Environment to assist with the preparation of guidelines for planning and reporting recycled water programs. The draft guidelines will be released for public comment and published in early 2004.

The guidelines provide a structured and practical framework that includes a triple bottom line assessment methodology to assist water authorities and businesses in identifying potential markets for recycled water and the most beneficial and high value use for recycled water. The guidelines also provide a strategic approach that will assist water authorities and businesses to achieve the relevant challenges in the Department’s Green Paper – Securing Our Water Future.

Click here to go the Department of Sustainability and Environment’s website for more information.

Dr Jeff Washusen joins MJA team

November 2003

MJA is pleased to announce that Dr Jeff Washusen has recently joined our team as a principal. Jeff has substantial experience in energy industry reform and privatisation, energy market development and operation, utility regulation, and a focus on consumer issues. Jeff's appointment offers our clients greater access to considerable practical, hands-on experience in economic and technical regulation of utility industries.

Development of Integrated Natural Resource Management Plan

October 2003

MJA is working to assist the Southern Gulf Catchments group to develop a natural resource management plan for the future sustainable development of a critical region of North West Queensland, stretching from the Gulf of Carpentaria down to Mt Isa. This is a joint project being undertaken in collaboration with Earth Tech Australia.

The Southern Gulf Catchments is a community based organisation based in Mt Isa, representing the full range of stakeholder interests in the region, which is dominated by grazing, mining, commercial fisheries and tourism.

Wimmera Mallee Pipeline Project

September 2003

MJA has been contracted to prepare the business case for the Wimmera Mallee Pipeline Project. This business case is scheduled to go to the Victorian Government in December 2003. MJA is working with Connell-Wagner, the lead consultant on the project.

The project will be one of the largest water supply projects ever undertaken in Australia, and will supply bopth rural and urban water consumers. It will involve the installation of 6,000km of pipeline supplying 2,700 commercial farms and 35,000 urban consumers in 40 towns. Water savings of 90,000ML will be realised through the pipelining of the existing leaky open channels. These savings will be directed to restoration of the important ecosystems of the Wimmera and Glenelg Rivers and to promote regional development.

Visit the website for Wimmera Mallee Pipeline Project for more information.

John Marsden appointed to Australian Competition Tribunal

August 2003

Dr John Marsden, Director of Marsden Jacob Associates, has been appointed to the Australian Competition Tribunal for a five year term, together with Mr Rod Shogren.

The Tribunal's functions include reviewing authorisation and exclusive dealing notification decisions made by the Australian Competition and Consumer Commission (ACCC) under the Trade Practices Act, and reviewing access decisions made under the anti-competitive conduct and record keeping rules of the Act in relation to the telecommunications industry.

For further information, click here to read the press release on the Commonwealth Treasurer's website.

Economic analysis of proposed Meander Dam

July 2003

MJA has completed an economic analysis of the proposed Meander Dam in Tasmania. This report was completed for the Tasmanian Government and forms part of the Tasmanian Government's submission on the Meander Dam to the Federal Minister for Environment and Heritage.

The report provides an independent assessment of economic documents submitted to the Tasmanian Revenue Management and Planning Appeals Tribunal in February 2003, as well as a comprehensive cost benefit analysis and financial and economic assessment of the proposed Meander Dam.

For more information and to download the report, click here to go to the website of the Tasmanian Department of Primary Industries, Water and Environment.

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