SEQ's bulk water price settings for 2018-21 up for comment

The Queensland Competition Authority (QCA) today published its draft report recommending bulk water prices for south east Queensland for 2018-21.

Bulk water pricing in the region is determined by the State Government. The QCA has been directed to review the costs of the sole supplier, Seqwater, and to recommend prices for consideration by the State Government.

QCA Chairman Professor Roy Green said the authority’s draft recommendations – for 2018-21 across 11 council areas – had been finalised and presented to the State Government.

Professor Green said the price for bulk water accounted for around 30% of an average household’s water and sewerage bill.

He explained that, for historical reasons, bulk water prices had varied from council to council but that a single common price for a kilolitre (1,000 litres) was expected to apply by the end of the decade across south east Queensland.

“Eight of the councils in south east Queensland have already reached a common price, with the Sunshine Coast, Noosa and Redland City needing to make up some more ground,” Professor Green said.

“This year the State Government has asked the QCA to present two pricing options, one that would see the common price reached by all councils in 2019-20 and the other would achieve that in 2020-21.

“Under the first option, the current bulk water price for the eight councils paying the common price – Brisbane, Gold Coast, Ipswich, Lockyer Valley, Logan, Moreton Bay, Scenic Rim and Somerset – of $2.82 per kilolitre would rise by 3.2% in 2018-19 and 2.5% in 2019-20.

“The price for Sunshine Coast and Noosa would increase by 7.0% and 6.5%, year-on-year, while the price for Redland City would rise by 8.2% and 7.6%.

“Under this option, these councils would reach a common price of $2.98 per kilolitre in 2019-20, with everyone seeing a forecast rise of 2.5% to $3.06 per kilolitre in the following year.

“Under the second option, the common price applying to the group of eight councils would rise by 2.8% in each of the three years.

“This option would provide more gradual increases for the other three council areas – over a three-year span instead of two – with Sunshine Coast and Noosa seeing price increments of 5.7%, 5.4% and 5.1%, while Redland consumers would see rises of 6.5%, 6.1% and 5.7%.

“Under this second option, a common price of $3.06 per kilolitre would apply to all 11 councils by 2020-21.”

Professor Green explained that, in response to severe drought, the State Government took over control of bulk water supply from the region’s councils in 2008.

To reduce the price impact of significant investments made in water infrastructure in response to low-water availability, the State Government decided that bulk water price increases for the region should be phased-in over time through a bulk water price path.

In order to avoid a sharp increase at the outset, prices were set to initially recover less than the cost of supplying bulk water, with the accumulated under-recovery – known as the ‘price path debt’ – gradually repaid over the coming 10 years, until fully repaid in 2028.

Professor Green said public involvement was an integral part of the QCA’s decision-making process and stakeholders were encouraged to comment on the draft report.

Interested parties will be able to comment on the document from today until 31 January 2018 with the draft Seqwater Bulk Water Price Review 2018-21 report available online.

The QCA will present its final report – after considering any submissions made over the coming two months – to the State Government by 31 March 2018.

A decision on whether to accept the QCA’s final pricing recommendations will be made by the State Government after that date.

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