In their role as the independent regulator responsible for determining the maximum prices that can be charged for certain water services in New South Wales, the Independent Pricing and Regulatory Tribunal (IPART) today released their Final Report and Determination regarding WaterNSW’s prices for NSW Rural Bulk Water Services, to be applied from 1 July 2017.
WaterNSW provides a range of services to different users (some of whom are customers), and a key step in determining the prices charged for WaterNSW’s services is to determine the sharing of the costs of WaterNSW’s rural bulk water supply between customers and the NSW Government. While prices and charges for water should, in general, recover the full efficient cost of providing the service to water users, in some industries there are economic arguments for some government contribution to the cost of providing WaterNSW services. These arguments include the existence of public goods and unavoidable legacy costs, or where it is impracticable to recover costs from specific users of these services.
IPART engaged Frontier (Asia-Pacific) to prepare a report providing expert economic advice on the regulatory framework for sharing the costs of WaterNSW’s rural bulk water supply between customers and the NSW Government. The report recommended a new long-term sustainable approach to cost sharing based on sound and well-accepted economic principles, which were ultimately adopted by IPART and detailed in the final report. As a result of Frontier’s advice, IPART has made a decision to implement an extensive review of the cost share framework (with involvement of stakeholders and drawing on Frontier’s proposed framework) before the 2021 determination.
Frontier regularly advises clients in the water sector, including government, regulators and businesses.