Our water bills to remain among state’s lowest

THE Essential Services Commission (ESC) has begun their consultation phase following the submission of final Water Plans from the twelve regional water corporations across Victoria.

This is the third major review undertaken by the ESC since it was appointed in July 2002. The Water Plans set out prices each business proposes to charge for water and sewerage services for the five year period commencing July 1, 2013.

Key features of the report for South Gippsland Water include:

• Annual water and sewerage bill for an indicative residential owner occupier are estimated to rise from $956 in 2012-13 to $1,068 in 2017-18 (remaining among the lowest bills in the State).
• Major projects include the Poowong, Loch and Nyora Sewerage Scheme and Northern Towns Connection Project which aims to secure the water supply of 78 per cent of the South Gippsland Water customer base for the long term.
• Maintenance of a simple tariff structure, comprising a fixed service and single volumetric charge for residential and non- residential (non-trade waste) customers.
• Continued reform of tariffs to harmonise the water service charge across its region, and gradually increase the volumetric water charges relative to fixed service charges.

Expenditure

The ESC has engaged Deloitte Access Economics to review the efficiency of the capital and operating expenditure proposed by each water corporation.

For South Gippsland Water, operating expenditure is proposed to increase from $80.4M to $84.4M over the five year period – the third lowest change in the state.

Capital Expenditure projects are planned across the entire region to ensure South Gippsland Water continues to meet service standards and regulatory requirements and total approximately $71M including:

• The Wonthaggi Sewer System upgrades ($1.3M), Foster Wastewater Treatment Plant works ($1.2M) and numerous pump stations region wide ($1.2M), which require upgrades to cater for increased development and ensure Environment Protection Authority (EPA) compliance.
• Regional growth is a significant contributor to capital expenditure, with works for projects such as the Poowong, Loch and Nyora Sewerage Scheme ($28.6M) and the Northern Towns Supply Connection works ($21.2M) – to service the expanding region – contributing to much of the corporation’s capital works program. The Northern Towns Supply Connection works are assumed to be funded by yet-to-be-confirmed State Government funds, and as such have no tariff impact.
• In addition to growth projects, there is $5.5M set aside for water and wastewater pipeline renewals and refurbishment works.

Demand forecasts

The trend for water businesses across Victoria is for forecast stronger growth in residential and non-residential water sales over the period. SGW forecasts a 10.6 per cent increase for residential water sales, but a 13 per cent decrease in non-residential water sales mainly due to demand requirements from major customers.

The Water Plan outlines revised Service Standards as well as the introduction of a Guaranteed Service Level program, where customers who receive unacceptable levels of service are compensated. These include:

• Unplanned water interruptions restored within five hours of notification or SGW will pay/rebate affected customers $75 for each breach;
• Unplanned interruptions to sewer service rectified within five hours of notification or SGW will pay/rebate affected customers $75 per breach;
• If SGW causes a sewage spill within a customer’s house, SGW will pay the customer $1000. SGW will also clean up the property and provide alternative accommodation as required.

Tariffs 

The proposed tariff increase is an annual weighted average increase of 1.9 per cent. South Gippsland Water is a state-owned corporation. Prices proposed in the Water Plan have been calculated to cover the corporation’s capital and operating costs listed in the Water Plan, and do not deliver profits for private investors.

Proposed tariff increases equate to a cumulative weighted average total of around 10 per cent over the five years.

South Gippsland Water’s Managing Director, Philippe du Plessis said, “The release of the ESC Summary of Regional Business Water Plans enables customers to view South Gippsland Water’s proposal compared to similar organisations and engage with both the Essential Services Commission and South Gippsland Water with respect to their views. South Gippsland Water has aimed to deliver a Water Plan that comprises minimal price rises but also delivers sustainable high quality water treatment and wastewater services for local communities and businesses.”

The Essential Services Commission is now seeking feedback from all customers. Copies of the detailed Water Plans can be found at the Essential Services web site www.esc.vic.gov.au along with details of the consultation process. The closing date for public submissions is January 25, 2013.

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