Victoria’s independent economic regulator, the Essential Services Commission (the Commission), has made its final decision today, Tuesday, June 18, on pricing for South Gippsland Water customers over the next five years.
And it has been approved, yes, Poowong, Loch and Nyora will get its reticulated sewerage scheme afterall and there’s little doubt the community campaign is what got the project over the line.
In releasing its Final Decision today, the Commission’s Chairperson Dr Ron Ben-David said that the final decision has resulted in lower water prices than those proposed in the draft decision released in March 2013, and lower than prices currently being paid. “A typical household will find its water and sewerage bill may be a little lower in 2013-14 than this year,” Dr Ben David said. “The Commission estimates the typical household will see its current bill decrease from around $956 this year to $949 next year.” “Excluding the effect of inflation, prices for South Gippsland Water customers will drop on average by 4.8 per cent over the next five years, rather than increase by 10.2 per cent, as proposed by the water retailer,” Dr Ben-David said. Dr Ben-David said significant consideration was given to the status of the Poowong-Nyora- Loch sewerage scheme. “Our draft decision was to not accept the cost as proposed by South Gippsland Water in its Water Plan of September 2012,” Dr Ben-David said. “South Gippsland Water has since provided revised costs to the ESC, which we have now accepted.” “The project is expected to be built in the next regulatory period, and to be up and running by 2018,” he said. The final decision on future water prices covers all of Victoria’s regional and rural water authorities and will take effect from 1 July 2013. Dr Ben-David said that although the Commission’s final decision was a good outcome for most Victorians, even these more modest price increases could still be problematic for some customers. “Customers experiencing difficulties paying their bills should contact their local water retailer to discuss the available assistance options,” Dr Ben-David said. The Commission reached its final decision after undertaking detailed analysis of the Water Plans submitted by each of the businesses in September 2012. This followed the Page 2 of 3
Commission’s state-wide consultations on the Water Plans as well as the draft decision it released in March. “Public input is an essential component in our assessment of the Water Plans and we thank those members of the community who took the time to attend our public forums or make written submissions during the course of this inquiry,” Dr Ben-David said. Over the last nine months, the Commission hosted almost 30 public forums in regional Victoria and received around 200 written submissions. Dr Ben-David said that while the water businesses had proposed prices intended to generate revenues of $4.2 billion over the next five years, the Commission’s final decision reduces this amount by $236 million. The lower revenue requirement directly benefits customers through lower water bills. “Most of this reduction has come from savings we identified in the labour costs, energy costs and other operational savings, as well as lower financing costs due to recent favourable shifts in interest rates,” Dr Ben-David said. The following table illustrates the current average annual residential bills, those proposed by the water businesses over the next five years and those approved by the Commission as a result of the Final Decision. Note, the figures shown in Table 1 are expressed in ‘real’ terms and the effect of future inflation will be added to the prices each year, as the actual inflation outcome becomes known.