Water bills to soar in new price plan
Written by Mark Drummond, Chief Reporter, Exclusive - 08 April 2009
WA households, already bracing for sharp rises in electricity prices, are facing average increases of 50 per cent in water bills over the next six years as the Carpenter Government moves to a new pricing scheme that reflects the true cost of delivering water.
The price rises are foreshadowed in a report due to be tabled in State Parliament today by WA’s Economic Regulation Authority, which highlights the Government’s reliance on desalination plants as a significant factor in the future price rises proposed by the State-owned Water Corp.
The ERA’s modelling suggests that to be cost-reflective, the average price of water services for households in the metropolitan area should rise by 34 per cent in real terms over the next six years. Using an annual inflation rate of 2.5 per cent, the rise would equate to a 54 per cent increase in nominal terms.
The big increases proposed by Water Corp and endorsed by the ERA leave WA households facing the prospect of a double blow from next year, when a freeze on the residential electricity tariff is lifted. As with water, the Carpenter Government wants to move to a more cost-reflective pricing structure for household electricity bills, which could ultimately mean rises of more than 40 per cent staggered over a number of years.
Implementing such rises in household water and electricity charges will be a politically sensitive task for the Government in the run-up to the State election, due within the next 13 months, particularly give Labor is generating annual Budget surpluses of more than $2 billion.
The ERA report, obtained by The West Australian, concluded that the tariff increases Water Corp had submitted for inclusion in the May State Budget were “consistent in principle” with its own recommendations that the average price of water services, expressed as the price per kilolitre of water delivered to metropolitan customers, should be increased from $1.36 to $1.81 over the next six years, a rise of 34 per cent in real terms.
The ERA says in its report that the “long run marginal cost estimates” used to calculate volumetric water charges had increased significantly since its last annual review of Water Corp’s figures. “The predominant factor for this increase is the decision to set aside the South-West Yarragadee as a future water source for Perth and rely predominantly on desalination plants”, the review stated.
The ERA review said that the recommended tariff increase would add $56.31 to average household water bills in 2008-09 for metropolitan customers to $984.96, a nominal rise of 6.1 per cent. The ERA review also foreshadows significant changes to commercial water charges for country consumers, with the proposed introduction of 15 pricing zones with different volumetric charges.
Treasurer Eric Ripper could not be reached for comment on whether he would endorse the rises being sought.