Media release – Tasmanian Economic Regulator, 10 May 2022
WATER & SEWERAGE PRICES INVESTIGATION FINAL REPORT and DETERMINATION RELEASED
Tasmania’s independent Economic Regulator has completed its review of TasWater’s proposed prices and service levels for water and sewerage services for the period from 1 July 2022 to 30 June 2026 (the fourth regulatory period).
Mr Joe Dimasi, the Tasmanian Economic Regulator, stated that the Final Report and Price Determination, released today, set out his final decisions on TasWater’s proposals for the fourth regulatory period. Mr Dimasi thanks all stakeholders and customers for their submissions on the Draft Report and proposed Price Determination.
The Regulator has determined maximum prices, based on an assessment of TasWater’s efficient costs, which are equivalent to annual price increases of 3.71 per cent for each year of the fourth regulatory period.
Mr Dimasi said that “the price increases are due to TasWater’s very large capital expenditure program and its associated operating costs, and recent increases in the cost of debt and inflation. The increase is much less, however, than TasWater’s estimate of a 6.5 per cent annual increase to achieve full cost recovery by 2025-26. This is because I have reduced the allowed costs in several areas, including the return on TasWater’s capital.”
On 1 May 2018, TasWater signed a Memorandum of Understanding with the Tasmanian Government and TasWater’s Owners’ Representatives Group which included TasWater’s commitment to limit any annual price increases to 3.5 per cent to 2024-25. Consistent with the MOU, TasWater has proposed price increases of 3.5 per cent, including for the additional year of 2025-26.
As TasWater’s 3.5 per cent increase is below the Regulator’s price increase, the Regulator expects TasWater to increase its prices by 3.5 per cent in 2022-23 and the following three years. A price increase of 3.5 per cent would result in a typical residential customer using 179kL of water per annum facing an annual bill increase of $43 in 2022-23.
The price increases in the Final Report are higher than in the Regulator’s Draft Report. Mr Dimasi said, “As foreshadowed at the time of releasing the Draft Report, the cost of debt has continued to increase and has resulted in a significantly higher allowance for the return on assets than in my Draft Report. In addition, inflation and inflation forecasts are higher.”
The Regulator has maintained his draft decision to accept 95 per cent of TasWater’s proposed annual capital expenditure allowance for each year. The total capital expenditure allowance over the fourth regulatory period is $45 million lower than proposed by TasWater. Mr Dimasi made this decision in light of the very large proposed capital expenditure and concerns that there can be delays in major projects that are outside TasWater’s control.
Mr Dimasi pointed out that “the capital expenditure allowance does not limit the amount TasWater can spend on capital projects nor does it have any impact on the projects TasWater decides to invest in during the upcoming period.” The Regulator has applied efficiency savings to TasWater’s operating costs. These have been set at 1.5 per cent per year, the same efficiency savings that were applied for the third regulatory period. A number of customers and stakeholders raised concerns about TasWater’s proposed approaches to sewerage pricing and trade waste pricing.
The Regulator acknowledges these concerns but also notes that these are complex matters and detailed analysis is needed before any alternative approaches can be fully assessed. The Regulator will therefore conduct inquiries into sewerage pricing and trade waste pricing during the fourth regulatory period and will welcome comments and submissions from interested parties.
TasWater is required to submit by 7 June 2022 an updated price and service plan that reflects the decisions set out in the Regulator’s Final Report and Determination. The Regulator will approve TasWater’s plan in late June 2022.
Media release – TasWater, 10 May 2022
Quality service to be continued for Tasmanians through new Price and Service Plan
TasWater’s new Price and Service Plan 4 (PSP4) will provide our customers with price certainty over the next four years while continuing to receive safe, clean and reliable drinking water in addition to essential sewage services that enhance the environment as a result of our activities.
PSP4 includes a 3.5 per cent price increase for the financial year beginning 1 July 2022.
Matthew Pigden, Chief Financial Officer, said the new plan will allow TasWater to deliver quality services and improved standards, along with upgrading and maintaining essential infrastructure. “TasWater, like many other water utilities across the country, is required to submit its proposed prices and services to an independent economic regulator for approval,” he said.
TasWater welcomes the independent Tasmanian Economic Regulator’s (TER) approval of a maximum price increase of 3.71 per cent per year for the next four years. However, consistent with the commitments TasWater has made to its customers, stakeholders and Owner Representatives, TasWater will only increase its prices by 3.5 per cent per annum over this period.
As noted by the TER, this equates to an average household increase of $43 per year, based off the average annual residential property water use amount of 179 kilolitres, or 83 cents per week for the 2022-2023 financial year.
“We continue to work closely with Councils, our Owner Representatives, and the State Government to ensure prices are kept as affordable as possible for our customers,” Mr Pigden said.
Through the development of the new PSP, TasWater has worked hard to balance short term operating needs, with long term infrastructure investment and the need to meet customers’ expectations at an affordable price. “A conservative price increase will allow TasWater to continue to improve and invest in water and sewerage infrastructure, including the continuation of our $1.1 billion capital delivery program over the next four years,” Mr Pigden said.
“This program of works undertaken by TasWater’s Capital Delivery Office (CDO) has boosted local employment with about 93 per cent of all contracts to upgrade or build new infrastructure going to Tasmanian businesses. This means hundreds of jobs for Tasmanians and better outcomes for our customers and the environment. “These projects, along with the significant capital works program already delivered, will ensure we can provide reliable services for our customers now and into the future,” Mr Pigden said.
As always, TasWater is here to help if any customers are experiencing financial difficulties. “We have a number of programs to support our customers who may be experiencing financial challenges, including a dedicated Customer Support Program team who work with individual customers on a solution that meets their needs, whether it is in the short or long-term,”
For more information on our Price and Service Plan visit: https://www.taswater.com.au/accountsbilling/fees-charges/price-service-plan/psp3-extension-questions-and-answers.
For more information on our Customer Support Program visit: https://www.taswater.com.au/YourAccount/Customer-Support-Program.
