Canberra’s water utility has appealed the June water price determination that will reduce household water and sewerage bills by about $83 a year.
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The Independent Competition and Regulatory Commission increased water prices by 5 per cent this financial year and cut sewerage charges by 18 per cent.
But ACTEW has applied for a review of the ruling.
In an application to the ICRC it warns it is seeking higher prices to address its concerns.
The move comes after the water utility’s 2012-13 annual report listed an after tax profit of $80.3 million, $6 million more than the previous financial year.
The ICRC said on Wednesday the ACT government would convene an industry panel to review the determination.
ACTEW managing director Mark Sullivan said “people shouldn’t believe there’s confusion or disruption in what they’re paying for their water and sewerage because this is going to take some time.”
He said the review could take up to a year.
ACTEW is challenging the ICRC’s decision to reset water prices every two years, instead of every five.
The water utility is also appealing the regulator’s decision to reduce the rate of return on equity to the ACT government for the first two years of the six-year regulatory period.
The ICRC reduced the rate of return to 2.8 per cent to avoid hitting water consumers with an even larger price hike in one hit.
Instead it ruled it would phase in water price increases of about 20 per cent over six years.
ACTEW’s review application says the determination showed a “lack of regard for the requirement…to recognise properly the cost of providing services…and an appropriate rate of return”.
“Addressing these concerns will necessarily put upward pressure on prices and potential social impacts will need to be managed,” the application says.
ACTEW said that “to that end” it would not be trying to recover a $236 million revenue shortfall from the years 2008 to 2013.
Mr Sullivan said on Tuesday the water utility was “not that interested in the financial impact of the review”.
But he said the price determination created too much uncertainty for ACTEW’s business model.
“In respect to the operational expenditure and the capital expenditure we need a longer time frame to be able to plan our business properly and not renegotiate every two years with the regulator,” he said.
“We think five year water determinations are a good idea.
“We want a regulatory model which gives more certainty than this one does over a 5 year period.”
Mr Sullivan said ACTEW would abide by whatever ruling the industry panel reached.