The rate at which water supplies can be reliably extracted from Sydney’s catchments on a permanent basis without worsening the in-stream environment is known as the sustainable yield. It is difficult to estimate with precision. However, there is widespread concern that recent extraction levels exceed this sustainable rate — that an excess demand has emerged.

The body responsible for catchment–based supplies — the Sydney Catchment Authority (SCA) — is in danger of violating the reliability requirements of its operating licence if required to continue to supply the retailer — Sydney Water Corporation (SWC) — at existing rates of growth without recourse to additional sources.

It is in this environment that the Independent Pricing and Regulatory Tribunal of New South Wales (IPART) has been asked to review the structure of wholesale and retail water prices.