Representatives from 17 councils, including 10 mayors, attended a briefing on bulk water pricing by SunWater last week.
With bulk water pricing an issue for councils for some time, the LGAQ has been working with Nicole Hollows, SunWater’s CEO to address the uncertainty.
“Councils have only had CPI increases to their prices in recent times, but there has been a threat of pretty significant price hikes of greater than 300% for some councils,” said Arron Hieatt, LGAQ’s Principal Advisory for Water and Sewerage Infrastructure.
The LGAQ took up the bulk water pricing issue last year, and engaged Jacobs Consulting to provide insights and recommendations. The report was shared with councils and SunWater, and triggered greater interest in resolving the issue. The briefing last week was the first engagement between SunWater and Queensland councils collectively to negotiate alternate pricing arrangements.
“Talking and listening to council customers about delivering water to their communities is important to provide certainty now and into the future,” said Sarah Buckler, LGAQ’s General Manager, Advocate.
The challenge has been in keeping reasonable prices for rural and regional communities, while ensuring that SunWater is able to meet its costs in providing the bulk water services. Ms. Hollows explained to the meeting that greater insurance and electricity rates, among other factors, are impacting SunWater’s operating costs.
Some of the other issues discussed was the management of recreational areas owned by SunWater, with SunWater interested in partnering with councils. Also discussed was the need to scrutinise dam safety requirements imposed by the Queensland Government that will result in almost $900M of additional costs.
Actions from the meeting included piloting standard terms and conditions contracts with Central Highlands Regional Council, SunWater’s disclosure of costs by scheme, and further discussions about the regulatory asset base – the valuation of assets that determines prices.
SunWater is a Queensland Government owned corporation with 21 bulk water supply schemes worth around $13B. SunWater is economically regulated by the Queensland Competition Authority, but industrial and urban water has been excluded from reviews to date. The next review of irrigation prices is due in 2018.