Sydney Water pricing proposal 2020 Issues Paper

PIAC responded to the Independent Pricing and Regulatory Tribunal’s (IPART) Review of Sydney Water Corporation from July 2020 Issues Paper. 

Sydney Water updated their initial proposal in response to the ongoing drought conditions. While a welcome step towards better recognition of seriousness of current circumstances, PIAC considers a more comprehensive framework is needed to respond to climate change and the long-term scarcity of water resources. PIAC contends that current conditions go beyond exceptional circumstances of drought, and reflect a sustained trend of higher than average temperatures, unpredictable rainfall and accelerated evaporation.  

PIAC is concerned Sydney Water, and the current regulatory framework, manage and operate with the underlying assumption that historic long term ‘average’ conditions will continue. This assumption leads to a continuation of water management and use practices that are increasingly inefficient and unsustainable. We consider this undermines the interests of water users by failing to develop comprehensive long term strategies ensuring the supply of secure, sustainable and affordable urban water.

PIAC makes two broad recommendations: 

• IPART introduce an inclining block tariff (IBT) for residential water users as part of a comprehensive overview of the pricing framework, to better reflect the long-term insecurity of water resources, and encourage more efficient water resource use.
• IPART recognise the limitations of using adjusted long-term average conditions for demand forecasts and revenue requirements for Sydney Water and consider the impact of changing trends in climatic conditions on pricing, investment and operational decisions.