The Independent Pricing and Regulatory Tribunal (IPART) has released the WaterNSW Rural Bulk Water Services Pricing Determination, confirming that significant operating cost efficiencies delivered by WaterNSW over the last two years have reduced costs for most licence holders on regulated rivers across NSW.
Streamlined operations combined with innovation and rigorous scrutiny of all spending outlay has resulted in a 25 per cent lower cost base.
WaterNSW CEO, David Harris, said the pricing determination reflects concerted efforts by WaterNSW to reduce its operating costs and pass those savings on to customers
“With WaterNSW’s much lower cost base, fixed charges will drop in eight out of the 13 rural valleys and usage charges will drop in all rural valleys,” Mr Harris said.
“Most customers will receive substantial bill reductions in their WaterNSW charges. The majority of customers will enjoy bill reductions of more than 10 per cent, with reductions in southern and central river valleys around 12 per cent, and coastal valleys seeing a close to 30 per cent bill reduction.
“It is very satisfying that our efforts over the past two to three years, deliberately aimed at increasing our efficiency of operation and passing on those savings to our customer base, have been successful.”
Further recognition of WaterNSW’s efficient operations is reflected in the absence of an efficiency dividend in the final IPART determination. WaterNSW will implement the new pricing regime from 1 July 2017.
Another highlight of the Determination is a significant reduction in costs for customers driven by changes to fixed versus variable tariffs – a change for which WaterNSW advocated in consultation with, and support of, customer groups and peak industry bodies.
The results include an 80:20 tariff for fixed charges against usage in the Peel Valley from 2018-19, which will reduce general security customers’ usage costs per megalitre by more than two-thirds ($56.25 to $18.75) in the second year of the Determination.
Similarly a move to a 90:10 tariff structure for North Coast customers will lower costs per megalitre by 37 per cent over four years, while the new 80:20 tariff in the South Coast will lower costs by 15 per cent.
Other features of the Determination include:
- While WaterNSW’s operating costs have reduced significantly, increased Murray Darling Basin Authority pass-through charges collected by WaterNSW will impact southern valleys, most notably the Murray
- IPART also endorsed WaterNSW’s revised methodology for restoring asset maintenance capital investment to more sustainable levels. This funding will initially cover a comprehensive asset renewal program that will ensure that the ongoing maintenance demands of infrastructure vital to WaterNSW operations are sustainable and will not compound upon future users