Water bills for the average Melbourne household could soar by $290 next financial year under proposed price rises being considered by the industry regulator.
On Tuesday, the Essential Services Commission will decide whether to approve water plans by city retailers seeking price increases of an average 34 per cent – mainly to recoup costs from the Wonthaggi desalination plant. If approved, Yarra Valley Water customers would see their bills rise from about $910 to $1220 from July 1, an increase of $310.
South East Water bills would jump from $829 to $1118, an increase of $289.
And City West Water bills would rise from an average $793 to $1060 next year, an increase of $267.
Speaking on behalf of the industry, Yarra Valley Water’s managing director, Tony Kelly, said the cost of the desalination plant – which requires retailers to make $650 million in payments to the project’s consortium, AquaSure – was ”the main component” of the proposed increases.
But he added: ”The water industry in Melbourne has very good programs in place to assist customers who are struggling to pay bills – and we’re adding further to these programs to ease the burden of the next price rise. Customers should go to their water utilities websites for further details.”
Tuesday’s draft decision by the commission comes after the water retailers submitted a five-year plan, outlining their service delivery objectives, revenue requirements and proposed prices between now and 2018.
In country Victoria, most regional water businesses had suggested price increases ranging between 1 per cent to 28 per cent over the five years to June 2018.
The exception was Wannon Water, which sought a 3.4 per cent reduction.
But last month, the commission decided not to approve its plans. The commission chairman, Ron Ben-David, said that although retailers wanted to generate revenues of $4.2 billion over the next five years by marking up their prices, the regulator had proposed to reduce this amount by $185 million, in turn, giving customers lower water bills.
”Most of this reduction has come from savings we identified in the labour costs, energy costs and financing costs proposed by the water businesses,” Dr Ben-David said.
Consumer Action Law Centre spokesman Gerard Brody said he hoped the commission undertook a ”rigorous analysis” of the desalination costs to ensure that the retailers’ costs stacked up.
”We’ve also raised the prospect that some of the costs could be capitalised over a longer period – over the life of the asset,” he said.
”That could mean the initial price rises that have been forecast might not be as great.