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
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
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."
Lenders, shadow Minister for Water, said that other costs were
"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
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 www.esc.vic.gov.au, along with instructions for written submissions.
New prices will take effect July 1, 2013.