Draft Report Released – Review of Prices for Essential Energy’s Water and Sewerage Services

The Broken Hill Chamber of Commerce welcomes the draft report released today into the Independent Pricing and Regulatory Tribunal into the Review of Prices for Essential Energy’s Water and Sewerage Services in Broken Hill.

The draft report is now open for public comment and the Chamber has called on its members to provide any further information they would like referred to IPART during the next phase of consultation.

While the Chamber lobbied to retain the water subsidy to Broken Hill customers, IPART has suggested that the draft prices have been set to recover Essential Energy’s  costs without the need for a subsidy from the NSW Government.  The future of any subsidy is a consideration for the NSW Government.

The Chamber also requested that consideration be given to extending the timeline for the roll out of the Essential Water capital works program to reduce the impact of price rises on customers across time which has been positively endorsed in the recommendations.

Under the draft prices, customer bills for households and smaller businesses will increase in line with inflation for the majority of users in Broken Hill, with prices and bills to fall for some large water users, including businesses.

The Chamber welcomes the proposal put forward to introduce a single tier for water usage prices by removing Tier 2 usage prices and setting all prices at the current Tier 1 price. While small business owners will see their water and sewerage bills increase marginally more than inflation, IPART suggests that for those using more water, prices would actually fall due to the decision to remove the inclining block tariffs.

The Chamber also acknowledges that the overall price rises are significantly lower than those requested by Essential Energy which was of concern to business owners in Broken Hill.

In 2014/15, water and sewerage bills for most customers who currently purchase water in Tier 2 will decrease and then they will rise broadly in line with inflation.  The bill impact for customers with usage greater than 400 kL will depend on how much water they currently use in summer and non-summer periods.

IPART has also suggested the scaling back of Essential Energy’s capital expenditure and have applied a lower rate of return on its assets based on an assessment of market conditions.

The 2014 Determination is the first time IPART will set prices for Essential Energy’s water services to the mines in Broken Hill.  Under the draft determination, prices will reflect Essential Energy’s costs of servicing the mines and there will be no cross-subsidy between the mines and other customers, or between the mines.  The mines will pay the same water usage prices as the rest of the customer base.  The mines will have a separate set of water service charges from other non-residential customers and these charges are set to recover the difference between revenue expected from their water usage charges and total costs to be recovered from the mines.

IPART is seeking stakeholder feedback on the proposed prices by 11 April 2014.  The final determination will be released in June 2014.

The draft report, Essential Energy’s water, sewerage and other services in Broken Hill, is available on IPART’s website.  Fact sheets on the impacts of the draft determination on non-residential and residential customer groups are also available on IPART’s website.

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