The Commission has today published an Issues Paper regarding an inquiry into the processes followed by Government in setting the 2009-10 water and wastewater prices.
In accordance with the Treasurer's instructions to the Commission concerning this inquiry, submissions to the Issues Paper are due by Friday 1 May 2009.
The 2009-10 Transparency Statement (which outlines the factors considered by the Government in setting the prices) can be accessed below.
The Commission has finalised its Inquiry into the process that led to Cabinet’s decision on SA Water’s water and wastewater charges to apply in 2009-10. The Cabinet decision resulted in an average increase in water charges of 17.9% in real terms. Metropolitan wastewater charges remained constant in real terms, with regional wastewater charges increasing by 0.5% in real terms.
The significant increase in 2009-10 water charges follows a 12.7% increase in water charges (in real terms) in 2008-09. A major driver of the announced increases is the Government’s capital projects aimed at providing greater security of water supply to metropolitan Adelaide, including the Pt. Stanvac desalination plant.
The magnitude of the proposed capital expenditure, and the resulting increases in water charges, provided an important context to the current Inquiry and accentuate the need to ensure that the pricing process is robust and is capable of meeting the NWI best practice pricing principles.
Consistent with the approach taken in previous inquiries, the Commission has identified the types of improvements that should be made to the pricing process in order to achieve greater consistency with the relevant pricing principles. The Commission notes that there have been a number of improvements in the 2009-10 price setting process (for example, in expanding the benchmarking information and through the consideration of tariff reform). However, many of the suggested areas for improvement are similar to those raised by the Commission in previous inquiries. In particular, the Commission has raised concerns with the lack of information presented to Cabinet to demonstrate that forward-looking prices are based on prudent and efficient forecast costs. This deficiency is particularly significant, given the impact of the proposed major capital projects on future water prices.
The Final Report (which forms Part B of the Transparency Statement) was released by the Government on Thursday 29 October 2009. At the same time, the Government released its response (Part C of the Transparency Statement) to the Commission's Final Report.