Preservation Regulatory Determination – Robusto Investments Pty Ltd (trading as Compass Springs)

Status

Current status is Draft

Varying the current regulatory determination

The current regulatory determination applying to Robusto Investments is set to expire 30 June 2025. 

Without extending the term of the current determination, there is a risk that, if there was a period of time where there was no separate regulatory control in place (that is, post 30 June 2025) that Robusto Investments may use market power to set customer prices higher than they need to be and/or provide service levels that are not valued by its customers.

Therefore, the Commission has made a draft decision to vary the current regulatory determination that applies to Robusto Investments. 

Key terms of the proposed draft decision involve extending the term of the regulatory period by 12 months (so that the new expiry date is 30 June 2026), maintaining the maximum revenue cap in inflation-adjusted terms and setting a methodology in which the maximum nominal prices for 2025-26 will be derived. 

The proposed draft decision will protect the long-term interests of consumers and allow Robusto to recover appropriate revenue pending the Commission making a longer-term determination, which is planned to commence from 1 July 2026.

The Commission’s draft decision is outlined in detail in the statement of reasons, available below under publications.  Summary information on the draft decision is also detailed on the Commission’s FAQ page and At a Glance summary, which can be found below.  

Further info

Have further questions? Please refer to the sections below for further information on the current regulatory determination and previous regulatory determinations.

In addition, the following frequently asked questions provide information relating to the water retail services provided by Robusto Investments (trading as Compass Springs) at Mount Compass. 

• Robusto Investments price determination - frequently asked questions

This includes information on:

• the proposed 12-month extension to the current regulatory determination
• general queries relating to consumer protections, service and price, and 
• proceedings before the South Australian Civil and Administrative Tribunal and Supreme Court of South Australia.

Background

• On 25 May 2021, the Commission made a regulatory determination to apply for the period 1 April 2021 to 30 June 2022 (inclusive). In response to this determination, Robusto Investment submitted an internal review application under the Essential Services Commission Act 2002.
• On 26 August 2021, following the internal review, the Commission made a regulatory determination to apply for the period 1 April 2021 to 30 June 2022 (inclusive). This determination confirmed the 25 May 2021 decision and made a variation to adjust for operating expenses.
• On 8 September 2021, under Section 32 of the Essential Services Commission Act 2002, Robusto Investments lodged an application with the South Australian Civil and Administrative Tribunal (Tribunal) for an external review of the Commission’s regulatory determination made on 26 August 2021. The decision of the Tribunal was appealed by Robusto Investments to the South Australian Supreme Court. The Supreme Court appeal proceedings remain on foot.
• On 24 June 2022, the Commission made a regulatory determination to apply for the period 1 July 2022 to 30 June 2023 (inclusive).
• On 29 June 2023, the Commission made a preservation regulatory determination to apply for the period 1 July 2023 to 30 June 2025 (inclusive). In response, Robusto Investments submitted an internal review application under the Essential Services Commission Act 2002.
• On 3 October 2023, following an internal review, the Commission made a regulatory determination to apply for the period 1 July 2023 to 30 June 2025 (inclusive).
• On 16 October 2023, under Section 32 of the Essential Services Commission Act 2002, Robusto Investments lodged an application with the South Australian Civil and Administrative Tribunal (Tribunal) for an external review of the Commission’s regulatory determination made on 3 October 2023. That external review remains before the Tribunal.
• On June 2024, the Commission published the maximum prices for residential customers of Robusto Investment (trading as Compass Springs), for the 12-month period 1 July 2024 to 30 June 2025.
   
• Please refer to the previous project page for further information on previous determinations.

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Preservation Regulatory Determination applying 1 July 2023 to 30 June 2025

The previous regulatory determination that applied to Robusto Investments (trading as Compass Springs) from 1 July 2022 expired on 30 June 2023. In order to protect consumers’ long term interests with respect to the price, quality and reliability of essential water retail services, the Commission determined that, in accordance with Part 3 of the Essential Services Commission Act 2002 and Part 4 of the Water Industry Act 2012, a regulatory determination applying to Robusto Investments should be in effect.

On 29 June 2023, the Commission published a preservation regulatory determination to apply to Robusto Investments for the 24-month regulatory period 1 July 2023 to 30 June 2025. 

Submissions

Public submissions to the preservation regulatory determination are available below. Six submissions were considered as part of the review and discussed in the Commission’s statement of reasons, published 29 June 2023. 

Three additional submissions were identified, following finalisation of the preservation regulatory determination. The Commission has reviewed the additional submissions and confirms that the information and views presented are in line with the information and views already presented in the customer submissions that have been reported on, and addressed in, the Commission’s statement of reasons.

The additional public submission is available to view below under publications. 

External review of Preservation Regulatory Determination

On 26 July 2023, Robusto lodged an application for a review of the preservation regulatory determination made by the Commission, pursuant to section 31 of the Essential Services Commission Act 2002 (ESC Act). 

Pursuant to section 31 of the ESC Act and in accordance with Part 3 of the ESC Act, the Commission reviewed and considered Robusto’s application for review and its submissions therein, the information it has advanced and relies on in support of that application and other information available to the Commission at the time of undertaking the review. 

In summary, there are five key elements of the preservation regulatory determination that the Commission has reviewed, which Robusto either directly specified be reviewed in its application or can be ascertained from Robusto’s overall submissions.

Those elements are the:

• term of the regulatory period
• maximum revenue allowance
• maximum prices
• reporting requirement, and
• adherence to National Water Initiative Pricing Principles

The Commission’s decision on review in relation to these five elements is contained in the statement of reasons, available below under publications. The resulting subsequent preservation regulatory determination and a consolidated preservation regulatory price determination are also available to view below.

On 3 October 2023, the Commission made a further regulatory determination to apply for the period 1 July 2023 to 30 June 2025 (refer below).

Current determination applying 1 July 2023 - 30 June 2025

On 3 October 2023, the Commission made a determination to apply to Robusto Investments for the 24-month regulatory period 1 July 2023 to 30 June 2025.

The determination carried forward the substantive terms of the current regulatory determination (such as the determination of efficient and prudent costs and the maximum revenue in inflation-adjusted terms that can be recovered by Robusto Investments). It limits variations to only those price-setting-based parameters where the Commission has determined there is new, relevant and verifiable information which justifies adjustments being made (for example, customer numbers and inflation).

The 24-month term of operation allows for and promotes, engagement, consultation and stakeholder input into a comprehensive review to inform a subsequent determination to apply to Robusto Investments. The term of operation will allow the Commission to assess Robusto Investments latest expenditure proposal. This includes allowing for information gathering and analysis relating to, among other things, capital expenditure, asset values, demand and customer consumption, and operating expenditure.

The maximum revenue that Robusto Investments can recover over the 24-month regulatory period from residential customers and one non-residential customer is set at $414,189 (in nominal terms) and $359,472 (in real, December 2018 prices).

External review of current determination applying 1 July 2023 - 30 June 2025

On 16 October 2023, under Section 32 of the Essential Services Commission Act 2002, Robusto Investments lodged an application with the South Australian Civil and Administrative Tribunal (Tribunal) for an external review of the Commission’s regulatory determination made on 3 October 2023. That external review remains before the Tribunal.

2024-25 pricing update

Included in the current regulatory determination was a fixed methodology to be used to determine the maximum nominal prices that can be recovered from residential customers for the period 1 July 2024 to 30 June 2025. The Commission used that methodology to derive prices for 2024-25, in accordance with the terms of the regulatory determination. The prices for 2024-25 can be found under the ‘frequently asked questions’ tab. An explanatory document outlining the methodology is available under the Review decision – 3 Oct 2023 tab.

Pricing outcome - Maximum prices 2024-25

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Proposed 12-month extension to the current regulatory determination

The current regulatory determination applying to Robusto Investments is set to expire 30 June 2025. Without extending the term of the current determination, there is a risk that, if there was a period of time where there was no separate regulatory control in place (that is, post 30 June 2025) that Robusto Investments could use market power to set customer prices higher than they need to be and/or provide service levels that are not valued by its customers. 

Therefore, the Commission has made a draft decision to extend the current regulatory determination that applies to Robusto Investments by 12 months (until 30 June 2026).
This will allow sufficient time to undertake further information and evidence gathering, analysis and consultation (by both Robusto Investments and the Commission) to continue the process of making a longer-term determination to apply to Robusto Investments.

The draft decision proposes the following:

• The maximum revenue is held constant on an annual basis in inflation-adjusted terms at $179,736. This will be adjusted into a nominal maximum revenue using updated forecasts of CPI inflation.
• The maximum nominal prices for 2025-26 to be derived using updated information about customer numbers and connections (informed by customer invoices to be provided by Robusto Investments as per a proposed reporting requirement) and using updated forecasts of CPI inflation. The methodology to derive maximum prices, including the specific pricing structure and tiers, will remain as determined in the current determination.

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