Water tariff reforms 2011/2012
What are water tariff reforms?
We provide you with a water service, with the charges for this service made up of:
(i) An annual service charge, being a fixed charge billed at the start of the financial year. For residential customers around the state this is a fixed charge, and for non-residential customers it is based on the size of their water meter; and
(ii) Water use charges billed twice a year (three times in country regions) based on the quantity of water used during the billing period.
Water tariff reforms refer to changes in the way bills are calculated. This may include a change in the method of determining the charge or a change in the way the bills are structured.
Recent tariff reforms are based on the recommendations of the Economic Regulation Authority (ERA). As the independent economic regulator for the State, they ensure that we generate enough revenue to cover costs without overcharging you.
What are the water tariff reforms in 2011/12?
No new tariff reforms will be introduced in 2011/12, however reforms which were introduced in previous years will continue towards their targets.
As the Government is mindful of the impact that any changes may have on customers, all reforms are being phased in over a number of years. In most instances, changes will be phased in by 2012/13, with longer time periods for the more significant changes.
The water pricing reforms are:
Metropolitan water usage charges
There are several reforms to the metropolitan water use charges which are discussed below. These include changes to the rate at which water use is charged, the number of pricing tiers and the cut-off to which the new tiers apply. Most of the reforms are being phased in over a number of years to 2012/13; however changes to the water use rate are being phased in over an additional year to 2013/14, due to the State Government approving a lower price path for water in 2011/12 than recommended by the ERA.
Collectively, these changes increase the emphasis of the water use charge. This gives you more control over your water bill each year and encourages efficient water use.
Usage Rate
Water use charges are rising to reflect the increasing cost of new water sources. The annual service charge is remaining at the 2010/11 rate of $186.60, so water use charges will make up a larger part of total water bills. This means you have more control over how much you pay.
Pricing Tiers
Water use charges are structured so that the price per kilolitre increases as more water is used. The different tiers are based on the potential range in the cost of new water sources.
By 2012/13, the tariff structure will be simplified from 6 tiers to 3 tiers for residential customers and from 3 tiers to 1 tier for non-residential customers.
The current and proposed tiers are shown below:
Current Tapers | New Tapers |
1st Taper: 0 – 150 kL | 1st Taper: 0 – 150 kL |
2nd Taper: 151 – 350 kL | 2nd Taper: 151 – 500 kL |
3rd Taper: 351 – 500 kL | |
4th Taper: 501 – 550 kL | 3rd Taper: > 500 kL |
5th Taper: 551 – 950 kL | |
6th Taper: > 951 kL |
Country commercial water charges
Country non-residential prices are being adjusted to more accurately reflect the cost of providing water in country areas. In addition, the reduced price that currently applies for the first 300 kilolitres of water will be eliminated by 2013/14 and a flat price will apply for all non-residential water use.
A maximum price cap has been placed on the charge for water provided in towns where the cost of supply is very high.
Country non-residential customers’ annual service charges will continue to be based on the size of their water meters at state-wide uniform rates. As non-residential annual service charges are reducing in the metropolitan region, this will also be passed on to country customers.
Country residential water charges
For some country schemes, the price for high water use is being adjusted to more accurately reflect the cost of providing the water. The water use charge will make up a larger part of your total water bill, encouraging efficient water use and giving you more control over how much you pay. This adjustment will be phased in by 2013/14.
The tariff structure is being simplified from 9 tiers to ultimately 4 tiers. There are also changes to the tier thresholds to increase the rate at which more cost reflective prices apply.
We have a uniform pricing policy, which means that most households are charged the same rates for water use up to the average of 300kL per year, even if the cost of providing the water is higher. Lower charges apply for the few country towns whose cost of supply is less than the metropolitan region.
Why are water tariff reforms needed?
Our tariffs are periodically reviewed to ensure prices appropriately reflect the cost of services, while still supporting the Government’s broader social and environmental objectives.
The ERA has been responsible for reviewing the various components of our charges over the last few years.
The ERA completed a major review of our tariffs in September 2009. The price increases approved by Government for 2011/12 are based on the recommendations of the ERA, however a slightly lower price increase was approved for water than recommended by the ERA. The reforms to the tariff structure are based on the recommendations of the ERA. Collectively, these reforms aim to simplify the tariff structure and encourage water efficiency, by making it easier for you to understand the cost of your water service.
The pricing reforms are part of a range of initiatives by the Water Corporation aimed at encouraging the efficient use of water, including weekly watering rosters, winter sprinkler bans, Waterwise products and education programs.
Who approved the water tariff reforms and new pricings?
All water prices, including both the price levels and the tariff structure itself, are decided by the State Government who balance the impact of water prices with the total social, economic and environmental needs of the State, and are based on the recommendations of the Economic Regulatory Authority (ERA).
Who was consulted during the pricing review?
The Government consults various agencies prior to making its pricing and budgeting decisions, including the Department of Treasury and Finance and the Department of Water.
Inquiries undertaken by the ERA usually include public consultation, with all interested parties encouraged to make submissions to the ERA. This includes public forums to discuss any issues or concerns members of the public might have. The issues raised at the public forum and in the submissions were all considered by the ERA in arriving at its final recommendations.
What is the timing of the water tariff reforms?
In undertaking the tariff reforms, the Government is mindful of the impact that change may have on customers. Accordingly, all reforms are phased in over a number of years to allow customers time to adjust to the revised prices.
In most instances, changes will be phased in by 2012/13 with longer time periods for the more significant changes.
