The Australian Competition and Consumer Commission has released its final decision on the charges that Water NSW is able to levy for infrastructure services in the Murray-Darling Basin during 2015-16. This is the first annual review of charges conducted by the ACCC.
In June 2014, the ACCC set the regulated charges that Water NSW is able to levy from 2014 to 2017. The ACCC did this by setting a methodology to calculate charges to ensure that they reflect up-to-date information about water availability.
The methodology adjusts charges for changes in demand so that Water NSW can recover any under-recovery of revenue resulting from below forecast demand over time. Similarly, Water NSW has to return any over-recovery through reductions in charges in subsequent years. This methodology is designed to balance the interests of Water NSW, in terms of revenue stability and its customers, in terms of price stability.
Under the ACCC’s 2014 decision, charges in some valleys will increase in 2015-16. A range of factors are influencing prices in the Murray-Darling Basin, primarily low water availability in 2014-15.
The Water Charge (Infrastructure) Rules 2010 limit the ACCC’s ability to vary the charges to circumstances where it is reasonably necessary in response to changes in Water NSW’s forecasts or for price stability reasons.
“After careful consideration of the likely effect of the charge increases on customers, the ACCC has concluded that no further variation is necessary for ‘price stability’ reasons,” ACCC Commissioner Cristina Cifuentes said.
“The ACCC’s decision is to set the charges in accordance with the 2014 decision, with some adjustments to take account of updated forecasts not previously provided to the ACCC.”
The ACCC anticipates that the charges determined will increase Water NSW’s bills for customers in the Border, Peel, Lachlan and Macquarie valleys, the Fish River Water Supply Scheme and the Lowbidgee Flood Control and Irrigation District. Bills for customers in other valleys are expected to either fall or remain at 2014-15 levels.
“The Murray-Darling Basin water markets rely upon efficient and transparent charges for water infrastructure access and use. Rural water markets are an often underestimated sector of the Australian economy,” Ms Cifuentes said.
The ACCC’s final decision and stakeholders’ submissions are available on the ACCC website.
Water NSW is the result of the merger between State Water and the Sydney Catchment Authority in January 2015.
The ACCC released a draft decision for this review on 16 April. After considering stakeholders’ submissions, the ACCC’s final decision maintains the approach taken in the draft decision.
Final charges in all valleys are slightly lower than the charges listed in the draft decision, due to updated volume data and a slightly lower inflation.
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