SA Water draft regulatory determination 2020

04 Mar 2020

This SA Water Draft Regulatory Determination 2020 proposes reductions to the total revenue that SA Water may recover during the four-year period commencing 1 July 2020, of 18 percent ($547 million) and 13 percent ($164 million) for drinking water and sewerage retail services respectively, as compared to the amounts determined for the current four-year period (2016-2020). 

On the Commission’s analysis, the revenue outcomes proposed would, if implemented, provide SA Water with sufficient revenue to fund efficient operations, finance prudent investments on a long term basis and meet the health, safety, environmental and customer service standards that will apply to SA Water over the coming four years. 

The Draft Determination is consistent with the expectation that SA Water should deliver drinking water and sewerage retail services at the quality and reliability levels that customers value for the lowest sustainable long-term cost to them. It passes through to customers the benefits of the lower financing costs that SA Water currently faces, while keeping capital and operating expenditure broadly in line with the amounts incurred in the current regulatory period.

Both stakeholder submissions and the Commission’s own review have highlighted that some of SA Water’s expenditure proposals – noting that in total SA Water is seeking an additional $456 million in capital expenditure and $121 million in operating expenditure over current levels – have not been justified by SA Water and are not consistent with customers’ main priority that SA Water’s prices are kept as low as possible while at least maintaining current levels of service. 

Importantly, the revenue reduction proposed in this Draft Determination is indicative, based on evidence and information available at this time, and may change for the Final Determination in light of submissions, new evidence and updated market information.

The Commission notes that the South Australian Government is considering the recommendations of an independent Inquiry into SA Water’s drinking water regulated asset base and prices: this Draft Determination does not take into account any outcomes that might arise from that Inquiry.

Submissions on this Draft Determination are welcomed by 15 April 2020. All submissions will be considered before a Final Determination is made in May 2020.

 

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