Below we present key information from Water NSW’s pricing proposal for customers in the Border valley. This information is not exhaustive and should be viewed in conjunction with our Issues Paper.
Proposed costs for the Border valley
The costs proposed by Water NSW are higher than we used to set prices in the 2017 determination.
- Proposed customer share operating expenditure for Border valley has increased by 24%
- Proposed customer share Border Rivers Commission (BRC) costs have increased by 72%
- Proposed customer share of capital expenditure for Border valley has increased by 71%.
Offsetting these increases, the proposed cost of capital has decreased from 3.1% to 1.7%.
Proposed customer share of revenue requirement for Border valley over 2021 Determination
Note: UOM is the "unders and overs mechanism" balance from the 2014-17 regulatory period.
Data source: Water NSW proposal and IPART analysis
What is driving the change in costs in the Border valley since 2017?
Data source: Water NSW proposal and IPART analysis
Proposed prices for the Border valley
Water NSW has proposed prices that recover the revenue required for 2020-21 (indexed by 1%), using updated entitlement and usage forecasts, instead of basing them on its proposed costs from 2021-22. Water NSW’s proposed prices under-recover its proposed 2021-22 costs by around 12% for the Border valley.
Under the Australian Competition and Consumer Commission (ACCC) rules, we are required to set prices for Water NSW that recover its full efficient costs of providing its bulk water services (net of any government contributions). Given the cost increases proposed by Water NSW, prices must increase by more than proposed by Water NSW to achieve Full Cost Recovery (FCR).
The table below sets out Water NSW’s proposed prices, as well the indicative prices that would recover Water NSW’s proposed costs over both a 1 and 4 year FCR basis.
Bulk water charges including BRC costs – Border valley ($/ML, $2020-21)
|
Current 2020-21 |
Proposed 2021-22 |
1 year FCR 2021-22 |
4 year FCR 2021-22 |
Change current to proposed |
Change current to 1 year FCR |
Change current to 4 year FCR |
|
|---|---|---|---|---|---|---|---|
|
Bulk water charges excluding BRC costs ($/ML) |
|||||||
|
High security |
$5.74 |
$5.91 |
$7.33 |
$7.29 |
3.0% |
27.7% |
27.0% |
|
General security |
$2.13 |
$2.16 |
$2.68 |
$2.67 |
1.4% |
25.8% |
25.4% |
|
Usage |
$5.86 |
$5.96 |
$7.37 |
$7.38 |
1.7% |
25.8% |
25.9% |
|
Bulk water BRC charges ($/ML) |
|||||||
|
High security |
$4.97 |
$8.39 |
$8.38 |
$8.70 |
68.8% |
68.6% |
75.1% |
|
General security |
$1.85 |
$3.07 |
$3.07 |
$3.19 |
65.9% |
65.9% |
72.4% |
|
Usage |
$0.84 |
$1.41 |
$1.41 |
$1.46 |
67.9% |
67.9% |
73.8% |
|
Bulk water charges including BRC costs ($/ML) |
|||||||
|
High security |
$10.71 |
$14.30 |
$15.71 |
$15.99 |
33.5% |
46.7% |
49.3% |
|
General security |
$3.98 |
$5.23 |
$5.75 |
$5.86 |
31.4% |
44.5% |
47.2% |
|
Usage |
$6.70 |
$7.37 |
$8.78 |
$8.84 |
10.0% |
31.0% |
31.9% |
Source: Water NSW proposal and IPART analysis.
Proposed bills for the Border valley
The table below shows Water NSW’s proposed bills for 2021-22, as well as the indicative bills arising from FCR prices under its cost proposal over 1 and 4 years.
Proposed bulk water bills including BRC costs for Border valley ($2020-21)
|
Current 2020-21 |
Proposed 2021-22 |
1 year FCR 2021-22 |
4 year FCR 2021-22 |
Change current to proposed |
Change current to 1 year FCR |
Change current to 4 year FCR |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
High Security |
|||||||||||||||||||
|
Small user – 100ML @ 100% |
$1,741 |
$2,167 |
$2,449 |
$2,483 |
24.5% |
40.7% |
42.6% |
||||||||||||
|
Medium user – 500ML @ 100% |
$8,705 |
$10,835 |
$12,245 |
$12,415 |
24.5% |
40.7% |
42.6% |
||||||||||||
|
Large user – 1,000ML @ 100% |
$17,410 |
$21,670 |
$24,490 |
$24,830 |
24.5% |
40.7% |
42.6% |
||||||||||||
|
General Security |
|||||||||||||||||||
|
Small user – 100ML @ 60% |
$800 |
$965 |
$1,102 |
$1,116 |
20.7% |
37.7% |
39.6% |
||||||||||||
|
Medium user – 500ML @ 60% |
$4,000 |
$4,826 |
$5,509 |
$5,582 |
20.7% |
37.7% |
39.6% |
||||||||||||
|
Large user – 1,000ML @ 60% |
$8,000 |
$9,652 |
$11,018 |
$11,164 |
20.7% |
37.7% |
39.6% |
||||||||||||
Source: Water NSW proposal and IPART analysis.
The indicative bills shown below represent indicative bills combining Water NSW’s proposed prices for its bulk water services and the Water Administration Ministerial Corporation’s (WAMC’s) proposed prices for its water management services.
High security bills for Border valley (medium user)
Note: See our WAMC Issues Paper for further information on WAMC bills.
Data source: Water NSW proposal and IPART analysis
General security bills for Border valley (medium user)
Note: See our WAMC Issues Paper for further information on WAMC bills.
Data source: Water NSW proposal and IPART analysis