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When Your Biggest Customers Are Shutting Down: How Gippsland Water Is Turning Industrial Risk into Regional Resilience
Executive Exchange — Episode feature with Sarah Cumming, Managing Director, Gippsland Water

In this episode of the Exec Exchange, Dr. Piers Clark speaks with Sarah Cumming, Managing Director of Gippsland Water in southeast Australia, about a scenario that would terrify most utilities:

Your largest industrial customers – who underpin your revenue, infrastructure scale, and regional economy – are all planning to partially or completely close within the next two decades.

Rather than waiting for the cliff edge, Gippsland Water is using that threat as a catalyst for long-term strategic planning, diversification, and regional economic leadership.

A Utility Built Around Industry

Gippsland Water operates in regional Victoria, covering 5,000 km² southeast of Melbourne and serving around 165,000 people. On paper, that sounds like a classic regional water utility.

In reality, it’s anything but typical.

  • Only 20–30% of Gippsland Water’s water and wastewater services go to domestic customers.
  • The majority of volume is delivered to a small number of very large industrial clients – including power stations, gas production and large-scale manufacturing.
  • The utility manages significant bulk infrastructure with high reliability contracts, where failure is not an option: losing service means losing power or gas to the state and the broader eastern seaboard.

This industrial base brings obvious advantages:

  • Scale and resilience in infrastructure and water resources
  • A strong role in regional economic development across four local government areas
  • Deep relationships with state government and major employers
  • The ability to act as a magnet for new investment into the region

But it also creates a unique risk profile.

The Shock: When Your Top Five Customers Are All in Transition

Cumming doesn’t sugar-coat it: every one of Gippsland Water’s five major industrial customers has a plan to close or significantly scale down operations over the next 20 years, largely driven by Victoria’s transition away from coal-fired generation.

On the wastewater side, these industries:

  • Account for two of the largest wastewater flows in the state
    On the water side, they are historically the second and third largest water users in Victoria (with the largest already halving its demand).

The implications are stark:

  • A huge portion of revenue will disappear over time
  • Infrastructure is oversized for a future with far lower industrial demand
  • The region faces structural economic change – jobs, skills and secondary industries all being reshaped

On top of that, industrial customers bring the usual complications:

  • Complex and sometimes contaminant-rich waste streams
  • Legacy contracts and arrangements that were not always set up on today’s commercial or regulatory footing
  • Legacy infrastructure designed and sized around historic demand that may not exist in the same form in 10–20 years

It’s not just an engineering challenge. It’s commercial, legal, social and political.

Which is exactly why someone with Cumming’s background – litigation, industrial relations, governance and major IT projects – is in the MD’s chair.

Negotiating Out of the Past and Planning for the Future

Gippsland Water inherited a set of legacy arrangements with industrial customers that were, in Cumming’s words, “extremely challenging”.

Rather than hoping they’d quietly resolve themselves, the organisation has gone directly at the problem:

  • Renegotiating legacy contracts to get to a more equitable and sustainable footing
  • Taking a “regional transition” lens, not just a utility lens – accepting that the region’s economy is changing and Gippsland Water must play an active role in that shift
  • Putting serious effort into strategic planning, beyond regulatory timeframes, to think 10+ years ahead

Crucially, they have not simply passed risk onto households.

Over the last decade:

  • The cost to serve has been consistently reduced year-on-year
  • Residential bills have been stable or slightly falling
  • The forward plan for the next 10 years is to continue lowering cost to serve, with the explicit aim of keeping bills stable even as much of Australia expects water prices to rise

That confidence doesn’t come from optimism. It comes from building new revenue streams and cost avoidances that are tightly aligned to the core water and wastewater business.

Building Commercial Businesses That Actually Help the Core Utility

Many utilities talk about “commercial diversification”. Gippsland Water has actually done it – and importantly, done it in ways that:

  • Are adjacent to its core capabilities
  • Address real operational problems
  • Generate profit that directly benefits customers

Two businesses stand out.

1. Gippsland Regional Organics – Turning Problem Waste into Profit

This is now Victoria’s largest organics recycling facility.

It started with a problem:
One major industrial client had a difficult waste stream that was causing significant damage and cost to Gippsland Water’s system.

Instead of treating it purely as a compliance headache, the team looked for a way to manage and value-add that stream. The result:

  • A for-profit organics recycling business
  • Capable of processing large volumes of industrial and municipal organic waste
  • Generating a significant profit that:
    • Offsets operating costs, and
    • Helps pay down debt linked to the residential customer base

As a publicly owned authority, those profits are not disappearing into a parent balance sheet. They are used to keep household bills as low as possible.

2. Gippsland Regional Agribusiness – Smart Use of Land and Wastewater

The second commercial pillar is Gippsland Regional Agribusiness, a diversified farming and land management business operating 12 farms across the region.

The origin again ties back to core operations:

  • Gippsland Water needed a cost-effective, compliant way to dispose of treated wastewater.
  • Using land-based application and fit-for-purpose treatment standards is significantly cheaper than treating all wastewater to high discharge standards for waterways.

The agribusiness:

  • Saves nearly $2 million per year in operating costs
  • Manages significant cropping enterprises
  • Oversees some of the state’s largest plantations
  • Retains flexibility to adjust land use and cropping patterns to maximise value and system benefit

Neither of these businesses is a vanity project. Both exist because they solve concrete operational challenges andgenerate financial return that can be recycled back into the regulated business.

One such business might be luck. Two begins to look like culture.

Positioning for the Next Economy

Looking forward, Gippsland Water is framing itself not as a passive victim of industrial decline, but as an active enabler of the region’s transition.

Key themes on the horizon include:

  • Mine rehabilitation, potentially using water-based solutions where Gippsland Water can play a delivery role
  • Attracting new industrial users into the region – offering secure services and infrastructure to underpin private investment and jobs
  • Exploring waste-to-energy opportunities tied to the organics business
  • Assessing the potential for a wind farm on one of its more remote properties
  • Continuing to run multiple options in parallel, testing where capital is best deployed for the greatest long-term customer and regional benefit

In other words, the utility is positioning itself as a platform: for decarbonisation, for circular economy solutions, and for new industries that can fill part of the gap left by coal and legacy heavy industry.

Leadership: Run Towards the Hard Problems

Cumming describes herself as a “deep generalist”, and it shows. Litigation, industrial relations, corporate regulation, governance, major IT – these are not typical stepping stones to running a regional water utility.

But for Gippsland Water’s reality – legacy contracts, industrial complexity, regional transition and the need for new business models – that background is an asset.

Her personal reflections land on two points:

  • Make the work meaningful and have fun along the way
  • The bigger the challenge, the better the critical thinking it forces

Or, as Piers neatly distils it at the end of the episode:

When something difficult appears, run towards it, not away from it.

For water sector leaders facing their own version of structural change – whether that’s decarbonisation, regulatory pressure, demographic shifts or industrial decline – Gippsland Water’s story offers a clear message:

You can’t control the macro trends.
You can control how early you start planning, how creatively you use your assets, and whether you treat risk as something to defend against or an opportunity to rebuild your business model.

To hear the full conversation with Sarah Cumming and dive deeper into Gippsland Water’s approach to industrial clients, commercial diversification and regional transition, listen to this episode of the Exec Exchange.

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