Water price rises set to flood in-The price of water is set to rise for the average Sydney household by up to $166 a year over the next four years.Sydney Water today applied to the pricing regulator, the Independent Pricing and Regulatory Tribunal, to raise the household water bill by 15 per cent, plus inflation, to 2015/6.
The round of price rises will start in the middle of next year.Advertisement: Story continues below
If the price rises are granted, by 2015/6, the average household water bill will have risen to $1271 before inflation is taken into account.IPART usually approves the price rises requested.The proposed rises come hard on the heels of double-digit rises for electricity.Power bills for some households will rise by up to 18 per cent from July 1, before rises of at least another 10 per cent from mid-2012.The introduction of the carbon tax will push power prices up faster still in the future.
Sydney Water said it had also embarked on a new round of efficiency cuts to reduce its costs by a further $140 million, conceding that its costs in many areas are still higher than those of private companies.
Of the average rise in the annual water bill, $55 of the increase will be needed to replace old equipment, $45 to build new pipelines and the like for new housing and $41 will be needed to help the company recover lost revenues, officials said.Over the past two round of price rises allowed by IPART, from 2005/6 until 2011/12, Sydney Water has sold about 10 per cent less water than it forecast as a result of the drought.
This has left it with a large level of borrowings, which the company has to repay.
"Sydney Water's financial sustainability has deteriorated ... as a result of its inability to earn revenue that is at least sufficient to service debt and to generate a return for its owners," the company said in its submission to IPART.In the four years to 2011/12, water bills rose 35 per cent, largely for the $1.8 billion desalination plant at Kurnell, which now makes up one-fifth of the water company's annual costs. The last of these rises, 5.8 per cent, came into effect from July 1 this year.The cost of operating the Kurnell plant is eclipsed only by the high cost of treating waste water and sewage, which accounts for a third of the group's total expenses.
Even though Sydney's dams are 79 per cent full, the desalination plant is operating at maximum capacity, as it is "settled in" after starting operations last year.
The round of price rises will start in the middle of next year.Advertisement: Story continues below
If the price rises are granted, by 2015/6, the average household water bill will have risen to $1271 before inflation is taken into account.IPART usually approves the price rises requested.The proposed rises come hard on the heels of double-digit rises for electricity.Power bills for some households will rise by up to 18 per cent from July 1, before rises of at least another 10 per cent from mid-2012.The introduction of the carbon tax will push power prices up faster still in the future.
Sydney Water said it had also embarked on a new round of efficiency cuts to reduce its costs by a further $140 million, conceding that its costs in many areas are still higher than those of private companies.
Of the average rise in the annual water bill, $55 of the increase will be needed to replace old equipment, $45 to build new pipelines and the like for new housing and $41 will be needed to help the company recover lost revenues, officials said.Over the past two round of price rises allowed by IPART, from 2005/6 until 2011/12, Sydney Water has sold about 10 per cent less water than it forecast as a result of the drought.
This has left it with a large level of borrowings, which the company has to repay.
"Sydney Water's financial sustainability has deteriorated ... as a result of its inability to earn revenue that is at least sufficient to service debt and to generate a return for its owners," the company said in its submission to IPART.In the four years to 2011/12, water bills rose 35 per cent, largely for the $1.8 billion desalination plant at Kurnell, which now makes up one-fifth of the water company's annual costs. The last of these rises, 5.8 per cent, came into effect from July 1 this year.The cost of operating the Kurnell plant is eclipsed only by the high cost of treating waste water and sewage, which accounts for a third of the group's total expenses.
Even though Sydney's dams are 79 per cent full, the desalination plant is operating at maximum capacity, as it is "settled in" after starting operations last year.
