A major and bitter row has broken out between Actew Water and the ACT Independent Competition and Regulatory Commission over the method of setting Canberra's water prices.
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In an unprecedented attack on the water utility, senior pricing commissioner Malcolm Gray this morning told The Canberra Times Actew had refused to provide crucial information required by the commission to set the five-year price for water from July next year.
He said the information would normally have been included in Actew Water's submission to the commission in July. It was not and the commission is so concerned about the refusal that it has informed ACT Treasurer Andrew Barr and Actew Corporation chairman John Mackay.
"Actew have put us in a difficult position by failing to provide us with a fully specified submission," Mr Gray said. "We have a job to do which relies upon Actew giving us full and complete information about the basis on which they are proposing to spend on opex and capex [operating expenditure and capital expenditure].
"They should be telling us what their proposed water sales are over that period which give rise to the opex and capex and how they underpin the revenue forecasts that they have given to government. We haven't had that information and it is making our lives very difficult."
The commission had a responsibility to produce a draft report on future water pricing by the end of November. Running the ruler of those estimates included engaging engineering consultants to validate the estimates.
"We are basically being compressed by the failure to produce a complete set of information in a reasonable time."
Actew had acknowledged in writing its submission provided no guidance to the commission on this matter but is limited to encouraging the commission to explore options which would minimise the social impact and price pressure of any revenue pass through.
Mr Gray said Actew was responsible for supplying water to the ACT and the commission's job was to ensure that was done at the minimum efficient cost.
"We can't do that unless they give us a full specification of how they are proposing to carry out that task."
Actew Water managing director Mark Sullivan has hit back, accusing the commission of continuing its flawed model of setting water prices. He said it was not possible to accurately predict water consumption over the next five years. The commission had sought to do that in 2008 which was why Actew Water had a $258 million revenue shortfall.
"There is a huge difference between refusal and a lack of capacity to do it," Mr Sullivan said.
Consultants from the ANU had advised Actew Water that an estimate of consumption over five years would simply be fiction.
"We have said we will work through modelling with them as long as they don't regard it as accurate," Mr Sullivan said.
The price of water is set, primarily based on consumption. If consumption falls, so does Actew Water's revenue. Conversely, increased consumption would give Actew Water a windfall profit.
"It might be this folly will not always lead to under recovery," Mr Sullivan said. "It could lead to massive over recovery."
The most important point was whether the community wanted an illusion of price security or the water price to reflect consumption levels in a far more contemporary way.
The way to overcome the flaw of the five-year price path was to abandon it.