THE ACT Independent Competition and Regulatory Commission (ICRC) draft report into the structure of Icon Water’s water and sewerage services tariffs in the ACT has raised eyebrows.

“The current water tariff structure comprises an annual supply charge and a two-tiered usage charge. The first tier charge is $2.61 per kL for the first 200 kL and $5.24 per kL for
consumption above that level,” a spokesperson for the Commission said.

“This structure of prices was introduced during the Millennium Drought and was designed to discourage water usage.

“The supply situation in the ACT today is quite different. Expansion in capacity, primarily to the Cotter Dam, and the breaking of the drought, means that the ACT is now much more water secure. Modelling water consumption and inflows, adjusted for the impact of climate change, indicates that further augmentation to capacity is not likely to be needed for at least another 30 or 40 years.

“An effective tariff structure should allow for the recovery of the efficient cost of providing water services. It should also provide incentives to use water efficiently depending on the supply conditions of the time.

The draft report finds that given the current water supply conditions in the ACT, the existing water tariff structure can be improved. Given current conditions, an efficient price structure would have a single usage charge based on the operational cost of providing the water and would include the value of the water. The remainder of the costs would be
recovered from the supply charge.”

“The draft report suggests that there should be a rebalancing between the supply charge and the usage charge. Such a change would see a relative increase in bills for low water users and a decrease for higher users compared to their existing bills. The draft report therefore suggests that such a change should be phased in over a ten-year period.

“The nature of the rebalancing would change if we move into a period of drought or water scarcity. In this situation, the usage charge would need to increase relative to the supply charge. This could also occur into the future if the capacity of the water system becomes tighter.”

Andrew Barr does not agree.

“The ACT Government holds concerns about the water pricing proposals put forward by the Independent Competition & Regulatory Commission (ICRC),” Andrew said.

“These proposals are in stark contrast to broader government policies, such as those associated with water conservation and efficient water use, and could be considered to send the wrong price signal to water users.

“Canberrans have taken water saving messages to heart – and this is a good thing. Together with the ACT Government’s investments in improved infrastructure including the Cotter Dam, this has improved Canberra’s water security. The Government cannot support a policy to reverse pricing signals that have encouraged water conservation, in isolation of other considerations.

“Further, the proposals from the ICRC would have a significant and disproportionate impact on low volume water users. It’s an unfair proposal that will hurt Canberra families.

“We will be putting our views on these proposals to the ICRC, through a Government Submission in response to the draft report, as part of the public consultation process the ICRC has now commenced.

“I will write to the ICRC to urge them in the strongest terms to ensure consideration of the social and environmental impacts of their proposal is undertaken to ensure fairness in water pricing.

“The ACT Government does not set water prices. The ICRC sets water prices in the ACT following consultation with the community and stakeholders such as the ACT Government. ”