Water prices in NSW are set to increase by up to 73 percent after IPART released its determination over the prices the NSW State Water Corporation can charge.
The Independent Pricing And Regulatory Tribunal decision sets the maximum prices that NSW State Water can charge for bulk water, with the latest decision covering the period from 1 July 2010 to 30 June 2014. Increases in water bills for high security customers will increase over the 4 years of the determination from 2 percent in the Murrumbidgee Valley to 73 percent in the Border Valley.
The prices for water are set for each valley and reflect the costs of providing bulk water services to customers that hold entitlements to either high security or general security water on regulated rivers, the price increases set by IPART in this decision only apply to areas serviced by NSW State Water and not Sydney Water or Hunter Water.
IPART CEO Mr. Jim Cox said the major factors driving higher prices in this determination are a lower level of forecast water sales than in the previous determination and an increase in State Water’s revenue requirements for operating and capital expenditure. In particular, State Water’s capital program results in a growing asset base and users are required to fund some of the return on and of capital on this investment.
“We understand that our decisions will result in considerable price increases for some customers in some valleys. However, these increases are required to fund the users’ share of the independently-assessed efficient costs of State Water supplying regulated bulk water services.”
IPART has included a revenue volatility allowance in State Water’s regulated revenue to allow it to remain viable during periods of low water sales. The revenue volatility allowance in the final determination ($7.78 million over 4 years) is less than proposed in IPART’s draft determination.
Mr. Cox said on average across all valleys, water prices will be around 28% higher at the end of the four year determination in 2013/14 than in 2009/10.