The ACT's Independent Competition and Regulatory Commission has warned residents of apartments and small houses in Canberra will face the largest increases in water bills as a result of a new pricing structure.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Set to take effect on Tuesday, the latest determination on the cost of water and sewerage services has been determined by an industry panel for the first time, not the commission.
The panel's decision ended prices which had been in place since 2013 after Canberra's Icon Water sought a review.
Made public this month by Treasurer Andrew Barr, the new pricing structure has left the ICRC to deliver charges it disagrees with.
The commission had decided to raise water prices by about 5 per cent and cut sewerage prices by 18 per cent, with the result of saving typical Canberra household about $83 a year.
Instead, the panel's decision would see an increase of about 1 per cent in combined water and sewerage charges, resulting in an increase of $14 for the typical household in 2015-16, compared with the current year.
The government said non-residential customers would see a 2015–16 bill change of between a 7 per cent decrease and an 11 per cent increase, depending on their consumption.
In 2013 Mr Barr said the original price cut would have amounted to a hit of $20million -$25 million a year to the ACT budget.
In a report released on Monday, Senior Commissioner Malcolm Gray said the new prices favoured large residential users and the biggest hit would come to those who used the least water, including in units, apartments and small houses.
The report also warned of an expected "sharp price shock" to hit in July 2018 when the next pricing period begins.
The decision would likely damage the interests of all stakeholders but the ICRC was "powerless to prevent it", despite the existing prices delivering Icon – formerly ACTEW Water – its biggest ever profit in the 2013-14 financial year.
The report predicted upward pressure on prices, an interruption to the resolution of some systemic issues and a reduction to the ICRC's ability to give the territory community assurances spending by Icon was prudent and efficient.
Government revenue and financing costs for Icon could not be accurately calculated under the new pricing, and "overly optimistic water sales forecasts" could pose a serious threat to Icon's revenue.
Mr Gray said the substitute price would have a negative impact on members of the Canberra community.
"We do not consider that the commission can be held responsible for any consequences that flow from the operation of the substitute price direction.
"In spite of our concerns the ICRC Act requires that we implement the substitute price direction as it stands and that we will do," he said.
Icon has welcomed the panel's final decision as balanced and expressed doubt about concerns of coming price shock.
"We now have certainty and pricing stability for the next three years and when you look at water and sewerage prices in the ACT and compare them to other jurisdictions, Icon Water prices sit at mid-range," managing director John Knox said this month.
He said the panel's findings served to validate Icon's original concerns about the 2013 price direction.
Previously Mr Barr attracted criticism for moving slowly to appoint the industry review panel, while an April 2014 report from ACT Auditor-General Maxine Cooper criticised the setting of water and sewerage prices, paving the way for an appeal.
Dr Cooper found poor communication, conflicts of interest and accusations of undue influence in the political process existed between the company and the ICRC.
