Friday, 26 April 2013

Water prices set to rise

Victoria’s independent economic regulator has rejected price increases sought by Melbourne’s four water businesses.

On Tuesday, the Essential Services Commission released its draft review of water prices in Victoria. The Commission’s Chairperson, Dr Ron Ben-David, said that businesses proposed that household water and sewerage bills would rise by about one-third over the next five years.

Last year in Melbourne, water customers had among the highest annual increases (15%) in their water and sewerage bills, with bills for Yarra Valley Water, South East Water and City Water increasing by $147, $107 and $104 respectively.

Source: Essential Services Commission

The Essential Services Commision will set the final price. The Commission analysed plans and found the water companies were over-estimating their energy, parts and maintenance costs.

Ron Ben-David, CEO of the Essential Services Commission, said, “We’ve gone through the water plans very, very carefully and we’ve found savings worth a few hundred million dollars, and that gets reflected back in the lower prices, which is why we announced that we haven’t accepted the proposed $300 dollar increases.”

The culprit: Desal
The water companies and the Commission agree that the major reason for the increase is the cost of the Wonthagee Desalination Plant.

Dr Ben-David stated “The Commission is not satisfied that Melbourne Water has adequately supported its claim that it must fully pass through its desalination costs to customers in order to avoid adverse impacts on service delivery and its financial position.”

Hear more of Ron Ben-David's interview below:

Peter Walsh, Victoria's Minister for Water, agreed that the Labor-initiated is costly:
"If not for the desalination plant costs, an average bill may only have increased about $50 next year."

Jon Lenders, shadow Minister for Water, said that other costs were involved:

"Victorians  over  the  last  year have paid more in State Government water taxes, water dividends and other water charges than they will pay for the Desalination Plant."

Data from the Auditor-General shows that the desal plant costs Victoria $1.81 million dollars per day. Water dividends amount to around $925,500 per day.

Helping Victorians pay: Guaranteed Service
Regardless of the reason, the result is that all Melburnians will be paying higher water prices. “We certainly do appreciate that even though $200 is better than $300, $200 is really a lot," said Mr Ben-David.

The Commission has set aside $5 million in a virtual ‘safety net’ to protect customers in hardship.

All urban water businesses were obliged to assist customers in financial hardship.

Wanted: Community input
The commission wants public input before the final prices are set. Public meetings will be held in Melbourne (April 30), Sunbury (April 30) and Frankston (May 1).

Details on public meetings are available on, along with instructions for written submissions.

New prices will take effect July 1, 2013.

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