The Australian Competition and Consumer Commission has released its draft decision on proposed charges for WaterNSW’s infrastructure services in the Murray-Darling Basin (MDB) during 2016-17. These charges are consistent with the ACCC’s 2014 determination, based on the principles and rules established under the Commonwealth Water Act. The charges have been set to recover WaterNSW’s prudent and efficient costs of providing infrastructure services to water users.
“The Murray-Darling Basin has some of the most developed water markets in the world. The importance of rural water markets cannot be overstated in the context of the Australian economy,” ACCC Chair Rod Sims said.
“Water markets in turn rely upon efficient and transparent charges for water infrastructure access and use.”
In most valleys, WaterNSW can only recover 40 per cent of its required revenue through fixed charges; the remaining 60 per cent must be recovered through variable (usage) charges. Ongoing dryer conditions throughout 2015-16 resulted in lower than forecast usage in all valleys, which in turn led to a revenue shortfall for WaterNSW. The pricing model allows charges to increase to recover a portion of this shortfall. It is this adjustment that accounts for most of the draft charge increases for 2016-17.
The ACCC anticipates that the charges determined will increase WaterNSW’s bills for customers in all valleys. In most valleys the increases in expected bills are expected to be less than 6 per cent compared with 2015-16. The largest increases are between 10 and 12 per cent for Lachlan and Macquarie valley high security entitlement holders and for users in the Peel valley.
Very low allocations for general security entitlements in the Lachlan and Macquarie also led to an increase in the high security premium - and therefore the high security entitlement charges - in those valleys.
Peel valley charges will increase by 11.9 per cent (10 per cent in real terms) and are forecast to reach full cost recovery levels for the first time.
The ACCC is seeking submissions on the draft decision by Wednesday 4 May 2016.
Following consultation on this draft decision, the ACCC intends to make its final decision on WaterNSW’s 2016-17 charges in late May 2016.
WaterNSW’s application for review of its charges and the ACCC’s draft decision are available at WaterNSW: annual review of regulated charges 2016-17
This is the ACCC’s second and final annual review of WaterNSW charges. From 1 June 2016, the NSW Independent Pricing and Regulatory Tribunal (IPART) will become the accredited regulator of WaterNSW’s charges under the Commonwealth Water Charge (Infrastructure) Rules 2010.