The Independent Competition and Regulatory Commission has issued a discussion paper as they mull over what to do with the price of water in an ACT now awash with water (which means drought cannot be far away)
As I write now, I can record that the drought that resulted in reduced inflows to the dams and the imposition of water restrictions ended in 2010 with one of the wettest years in Canberra’s history.
The dams are now nearly full and have been for the past year. Work on the major water security projects—the enlarged Cotter Dam and the Murrumbidgee to Googong Pipeline—is well underway and is expected to be completed by the end of 2012.
This sharp contrast in situation provides a graphic illustration of the challenges confronting those involved in the provision and pricing of water and sewerage services in the ACT. There is, however, one thing that the context of the present review shares with that of its predecessor: the debate about water security for the ACT is still running hot. The focus of the questions being asked has, however, changed. As the dearth of water has been replaced by an abundance, the questions now being asked include: why are water prices now rising and do we really need to make further efforts to restrain our water consumption? The first of those questions lies squarely within the scope of the current review, and the Commission is beginning to address the second in the review of secondary water use that is also in progress.
Part of the answer to the first question lies in the need to pay for the water security initiatives that were developed in response to the drought. There have been significant cost increases for some of these projects. The cost of the Cotter Dam enlargement was forecast at $145 million in 2007, rose to $363 million in 2009, and that estimate is likely to be breached as unusually heavy summer rains interrupt construction.
How these costs should be borne and whether there is scope to mitigate these costs going forward are major issues for the current review. It is also timely to reflect on the decisions that gave rise to a need to consider this question, namely the decisions to undertake the range of water security initiatives the costs of which must now be recouped from the ACT community in one way or another. The Commission is keen to hear from the community on these and all the other issues identified in this paper
Submissions close on 30 March.