A report by Western Australia's Economic Regulation Authority has recommended the Water Corporation should drastically curtail price increases proposed for the next two years.
A report by Western Australia's Economic Regulation Authority has recommended the Water Corporation should drastically curtail price increases proposed for the next two years.
The independent report concluded that average water prices should increase from $1.01kl in 2005-06 to $1.07kl in 2014-15 in real terms, compared to the Water Corporation's proposal to increase average prices to $1.17kl in 2006-07 then to $1.20kl in 2008-09 and then to maintain average prices at that level.
Treasurer Eric Ripper welcomed the report, though he said the Government did not agree with all the recommendations.
"We will not, for example, support the recommendation to change the pricing structure for waste water services, which we believe would disadvantage people with low value properties and renters.
"Other recommendations will be considered in the context that the Government remains fully committed to keeping the basket of household fees and charges to below inflation."
Below is a list of key conclusions from the report as well as the full government statement:
- Prices for water services should be structured so that usage charges are set at levels to reflect the estimated cost of developing new water resources to meet water demand.
- Prices for wastewater services for residential customers should be gradually decoupled from property values and determined as an inclining tariff, thus increasing transparency, while retaining, in part, the principle of charging according to capacity to pay
- Average water prices (expressed as a price per kilolitre of water delivered to all customers) for the Water Corporation should increase from $1.01 in 2005/06 to $1.07 in 2014/15 in real terms (an average rate of 0.7 per cent per year). By comparison, the Water Corporation has proposed to increase average prices to $1.17 in 2006/07 then to $1.20 in 2008/09 and then to maintain average prices at that level.
- Average wastewater prices (expressed as a price per connection) for the Water Corporation should decrease at an average rate of 0.8 per cent per year in real terms for the period 2006/07 to 2009/10 and then remain constant in real terms, compared to the Water Corporation's proposal that wastewater prices remain at current levels in real terms.
- Average water prices for AQWEST should decrease at an average rate of 1.4 per cent per year in real terms over the period 2005/06 to 2014/15, which is broadly consistent with AQWEST's proposal.
- Average water prices for Busselton Water should increase at an average rate of 0.7 per cent per year in real terms over the period 2005/06 to 2014/15, which is broadly consistent with Busselton Water's proposal.
- It is not necessary for the Water Corporation to recover the cost of the Perth Seawater Desalination Plant substantially through a one-off step increase in prices. Rather, the Authority is of the view that a "smoothed" price path over a 10-year period is likely to be more readily accepted by customers and provide for the recovery of costs in a normal way.
- On the basis of conservative assumptions about rainfall runoff (similar to the last eight years), reduced abstraction from the Gnangara Mound and a 1 in 50 year risk of a total sprinkler ban, either sprinkler restrictions can be relaxed to three days per week watering in 2006/07 or the proposed development of the South West Yarragadee aquifer could be deferred by three years.
- A cost-based system of price determination should be introduced for the Water Corporation, AQWEST and Busselton Water to transparently link tariffs to the costs incurred in operating these businesses.
Urban water pricing report released.
Treasurer Eric Ripper today released the first-ever independent evaluation of water prices across Western Australia.
Mr Ripper said while the Government did not agree with all the recommendations the report by the Economic Regulation Authority (ERA) heralded a new era in openness and transparency for setting water prices.
"For the first time a government in WA has commissioned independent advice on water pricing and given the community a chance to have a say in the preparation of that advice," the Treasurer said.
"The authority's inquiry process involved rigorous economic and financial analysis, extensive public consultation and the consideration of many written submissions from interested parties."
Mr Ripper thanked the ERA for producing such a comprehensive report and said it would in part be considered in the 2006-07 Budget process.
"However, the Government will not endorse any actions that disadvantage low income households," he said.
"We will not, for example, support the recommendation to change the pricing structure for waste water services, which we believe would disadvantage people with low value properties and renters.
"Other recommendations will be considered in the context that the Government remains fully committed to keeping the basket of household fees and charges to below inflation."
The purpose of the independent inquiry was to inform the Government's decisions on the level and structure of urban water and wastewater prices and to recommend a system to set prices for the Water Corporation, AQWEST and Busselton Water.
