Developers will pay Icon Water $1200 for every extra person they squeeze into an established suburb in an effort to help pay for upgrades to the water and sewerage network.
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The ACT's Independent Competition and Regulatory Commission has approved the water utility's new Capital Contributions Code, which will force developers to co-fund work on suburb infrastructure under pressure from infill.
The code is effective from January 1 with an 18-month transition period for properties that were bought before then.
It will raise about $77.1 million to be spent on upgrades to sewers in Belconnen, Fyshwick, north Canberra, Woden and water storage in Campbell and Ainslie.
An extra 91,000 people are expected to squeeze into Canberra's established areas in the next 25 years.
Currently the last development that exceeds the network capacity bears the full cost of whatever upgrade is required.
This is regardless of the size of the development or whatever developments came before it.
"In effect, only one developer pays, whilst other developments, both before and after the augmentation, whose demand contributes to the need for the augmentation don't pay at all," ICRC senior commissioner Joe Dimasi wrote.
The charge will be worked out on the net increase in "equivalent population" on the site of the development, and deducts the existing population from the projected population
The formula counts an apartment as two people, a townhouse as 2.5, and a house as 3.6 people. It counts workers as 0.3 of a person, and school students and staff as 0.2 of a person.
A freestanding house built in an existing suburb would attract no extra charge if it replaced a freestanding house or had been earmarked for such development in a suburb plan.
But if the block was split into two new townhouses, the developer would pay $1680.
Coupled with the recent hike to the lease variation charge, the new cost could be a barrier to densifying Canberra's established suburbs and push up the price of a new home.
But Mr Dimasi said the commission was satisfied the charge represented "a more certain, and equitable funding arrangement than has been in place to date".
Icon had originally proposed levying developers only in Woden, Belconnen, Fyshwick, the city and the inner north with four different charges, based on the expected population increases in each area and the amount expected to be spent on infrastructure to cope.
Woden would have been hardest hit, with new development there attracting a charge of $3000 per extra person.
But the commission found that option was "administratively complex and was not supported by the development community".
"The commission believed that a simple and uniform capital contribution charge applicable to all established areas (a single precinct) in the territory would remove the potential for charges to be set in a discriminatory fashion between suburbs,'" Mr Dimasi wrote.
"A single precinct was also administratively simple to implement and for developers and the community to understand."
The utility went back to the regulator with a revised proposal in April. The charge was supposed to be in place by July 1 but was pushed back due to two rounds of public consultation.
The ICRC will review the charge annually.
Icon Water's managing director John Knox wrote to the commission saying the precinct covered by the code would grow "incrementally" as new greenfield suburbs were finished.
He said the utility had procedures in place to stop greenfield developers being charged twice if blocks in the suburb were built on after it was absorbed into the precinct.
The commission did point out Icon's capital works were already being paid for by existing water users.
