WATER prices will rise by 5 per cent as sewerage prices go down by 18 per cent in the coming financial year, in line with the final decision of the Independent  Competition and Regulatory Commission (ICRC), released today.

Overall, the decision means the “average water and sewerage bill for a typical Canberra household” will go down by about 7 per cent in 2013-14, which translates to an annual saving of $83, according to ICRC Senior Commissioner Malcolm Gray.

The decision differs markedly from the ICRC’s February draft recommendation, which concluded the water price should fall by nearly 17 per cent, and the sewerage price by 24 per cent.

The change in methodology and final determination has drawn the ire of  Liberal Treasury spokesman Brendan Smyth, who says ACT taxpayers are being forced to pay more for water, purely to keep ACTEW from becoming insolvent.

“It is completely unacceptable that water prices in the ACT are increasing by 5 per cent for this reason,” he says.

“ACTEW is running a monopoly on one of the most basic services in this Territory, and there is absolutely no reason that they should be overcharging Canberrans to keep afloat.

“Today’s report has confirmed that if the ICRC passed on its initial recommendation that water and sewerage prices should drop by an average of $230 a year, ACTEW would be unable to pay dividends to the Government in the foreseeable future.”

Today’s final decision was reached by using different methodology to the draft, following ACTEW’s submission that the price of water should rise, not fall, to help it remain financially viable.

“The Commission’s analysis found that it was not possible to transfer the burden of ACTEW’s costs to future water users without an unacceptable risk to ACTEW’s financial viability,” Mr Gray says. “For this reason the Commission has modified its traditional approach to determining water prices.”

ACT Treasurer Andrew Barr welcomed the decision and says it “means Canberra’s water prices will continue to compare favourably to other mainland capital cities, while not undermining the considerable efforts and gains that have been made to date in water conservation in the ACT”.

Both water and sewerage charges will also increase in line with the Consumer Price Index in the 2013-14 financial year.

“Every cent of profit that ACTEW makes is returned to the community, and the Government believes the community should receive adequate compensation (in the form of returns on equity) for owning ACTEW,” says Mr Barr. “But we acknowledge that providing a return should not put undue risk on the financial viability of ACTEW.”

Mr Barr says the decision will “enable ACTEW to better address its debt servicing obligations resulting from major investments in Canberra’s long term water security, including the Cotter Dam expansion and Murrumbidgee to Googong projects”

The Treasurer says the ICRC’s other recommendations from February about how the company is governed – including breaking up the ActewAGL partnership – will be examined separately.