22 September 2016

ICRC jumps the shark on water pricing

| 54-11
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The Independent Competition and Regulatory Commission has just released a review of Canberra’s water pricing regime. In it, they are proposing that fixed charges rise considerably, while usage charges are significantly reduced.

Their report (http://www.icrc.act.gov.au/water-and-sewerage/tariff-review-2016/) uses projections about which I am dubious of future water usage, population growth and climate change modelling to “prove” their point.

There is also a lot of internal dissonance amongst their conclusions, including for example, that the present costing structure is “a blunt tool to encourage water conservation is no longer providing the best and the most efficient outcome for the community in the current water secure circumstance”, then uses their own “blunt tool” to justify this crazy notion that somehow reducing water usage charges is more efficient.

My personal view is that they should be heading in the opposite direction – reducing or eliminating fixed charges, and rolling these into usage charges. This should not only encourage water conservation, but delay any future very expensive infrastructure upgrades.

The Chief Minister says he doesn’t agree with it (http://www.canberratimes.com.au/act-news/chief-minister-labels-water-price-increases-an-unfair-proposal-the-government-cannot-support-20160907-gras84.html), but he would say that just before an election. What he says and does afterwards will most likely be quite different.

After all, their brief for this report is to “use Icon Water’s infrastructure and water resources efficiently”.

Over to the Rioters for their views?

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HiddenDragon5:03 pm 23 Sep 16

A table on page 244 of ACT Budget Paper 3, for the 2016-17 Budget, shows an estimated Icon Water dividend of $76.17m for 2015-16, falling slightly to $71.77m in 2016-17 and $74.82 in 2017-18 and then jumping to $90.87m in 2018-19 and $104.88m in 2019-20.

Perhaps we should have gone for gondolas and canal boats instead of trams…..

Southerly_views1:14 am 23 Sep 16

It is simple really – ICON water needs higher profits from a community that has actively participated in saving water both before and after ACTEW built an expensive new storage dam at Cotter. The ICON beancounters realised each houshold (and especially apartment dwellers who do not have a high number of occupants and individual gardens) are not paying enough for water. The current low supply charge and the astronomical unit prices for water have driven down demand and continue to promote water saving by commercial users and households.

The proposed higher annual fee will guarantee an increased income return from every dwelling, especially apartments. The lower per kilolitre tariff will probably encourage additional water use and also allow the government to say they have decreased the cost of water down from the current exhorbitant prices. Business and recreational users will also use more water at lower rates after a big reduction in their unit prices.

In addition, the government has always wanted to tax rainwater captured in household water tanks – an unpopular move. The proposed increase would effectively discourage new tanks from being installed and negate any of the current financial advantages for existing tank-owners due to the higher up-front supply charge. Home tanks will become uneconomical to install and existing tankowners will be subject to a hidden rainwater collection tax introduced by stealth.

Despite all the options we will ultimately end up being charged a maximum supply fee of around $800+ per year, probably with a one or two-tier rate, albeit lower than the current unit charges but probably higher than the proposed $1.74 per kilolitre.

Thus ICON and the government (despite denouncing the changes before the election) will have achieved their joint aim of a guaranteed minimum water income from every household, combined with higher water usage income as users relax their water saving practises. The implementation of a discrete rainwater tax on homeowners with tanks will also have been achieved.

According to my water bills, I use about 34kl a year, so I will definitely be worse off. To get to 300kl at that usage it would need a household of eight people. I said in the survey I was sent how much worse I would be off. It’s a shame we are not allowed to disconnect, as one can with electricity.
As far as I can see, this is being introduced so that small users will subsidise large users, ie, let the householder, including pensioners and the poor, subsidise the better off, the golf clubs and the like.

creative_canberran11:32 pm 22 Sep 16

Masquara said :

So … they encouraged us to be frugal with water, and are now punishing us for doing same by raising the fixed charges.

Encourage, present tense. We’re still meant to be frugal with water.

Thing is it doesn’t cost much to produce drinking water, particularly in Canberra. There are however costs for infrastructure and maintenance no matter how much we use.

So … they encouraged us to be frugal with water, and are now punishing us for doing same by raising the fixed charges.

Anyone who wants to make a submission about this can do so easily via the ICRC web site. Please do so because there are very few submissions. You can also read all the current submissions on the ICRC web site.

According to the commission’s report, any household using less than 300kl per year will be worse off under the proposed changes. The tier two usage price kicks in at 200kl a year so do not assume you will be better off because you currently often pay the higher rate. In fact I believe the vast majority of households will be worse off even larger families under these changes.

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