2018 Water and Sewerage Price Determination Investigation

Extension of Determination

The 2018 Water and Sewerage Price Determination was originally scheduled to expire on 30 June 2021. The Regulator is required by legislation to conduct a price investigation prior to making new price determination and therefore expected to be conducting a water and sewerage investigation during 2020‑21.

In response to the COVID-19 pandemic, TasWater wrote to the Tasmanian Government on 2 April 2020 asking it to extend the duration of the third regulatory period by one year to 30 June 2022, and defer the requirement to submit a proposed price and service plan (PSP) to the Regulator by one year, with a new submission date of 30 June 2021. 

The Minister for Finance informed the Regulator on 12 June 2020 that the Government intended seeking approval to introduce amendments to the Water and Sewerage Industry Act 2008 (Industry Act) to give effect to these changes.

The Electricity, Water and Sewerage Pricing (Miscellaneous Amendments) Bill 2020 (the Bill) was subsequently introduced into Parliament on 13 October 2020, passing the House of Assembly and the Legislative Council on 10 November 2020 and 18 November 2020 respectively. The Bill received Royal Assent on 27 November 2020.

In relation to the water and sewerage industry, the Electricity, Water and Sewerage Pricing (Miscellaneous Amendments) Act 2020 amended the Industry Act to:

  • extend the 2018 Water and Sewerage Price Determination by 12 months to 30 June 2022;
  • set the maximum regulated prices, fees and charges that TasWater can charge in 2021‑22 at the same level as those set out in the 2018 Water and Sewerage Price Determination for 2020‑21;
  • ensure that TasWater's current approved Price and Service Plan will apply for an additional 12 months to 30 June 2022, resulting in the approved customer service arrangements and customer service contract continuing unchanged into 2021‑22;
  • amend the Customer Service Code issued by the Regulator to ensure that the minimum service standards set out in the Code for 2020‑21 will also continue to apply for 2021‑22;
  • cease the transitional arrangements that are a legacy of the pre-reform pricing structures; and
  • set the next regulatory period for the next Water and Sewerage Price Determination to be from 1 July 2022 to 30 June 2026.

On 22 June 2020, following the receipt of the Minister for Finance's advice, the Regulator published a revised PSP Guideline for the fourth regulatory period to account for the revised dates and issued a fresh notice to TasWater requiring it to submot its proposed PSP to the Regulator by 30 June 2021.
 
To reflect the legislative changes the Regulator has published a revised Price Determination and updated Customer Service Code.

The Electricity, Water and Sewerage Pricing (Miscellaneous Amendments) Act did not make any alterations to TasWater's PSP.

Approved Price and Service Plan

The Regulator's Price Determination for the third regulatory period (1 July 2018 to 30 June 2021) required TasWater to revise its Price and Service Plan to ensure it was consistent with the Final Report and Price Determination.

The revised Price and Service Plan was resubmitted to the Regulator for review and approval on 31 May 2018.

The Regulator approved the revised Price and Service Plan on 25 June 2018. TasWater was required to publish its approved Price and Service Plan on its website.

The approved version of the Plan is available here: Price and Service Plan.

Final Report and Price Determination

The Regulator completed its third Price Determination investigation on 4 May 2018.

On completing its investigation, the Regulator released its Final Report and Price Determination.

To inform its Final Report, the Regulator requested that the Arup Group (Arup) provide an update on its independent review of TasWater's proposed operating and maintenance expenditure and capital expenditure. Arup's Final Report was submitted to the Regulator in April 2018.

The decisions contained in the Regulator's Final Report also take into consideration submissions received in response to the Draft Report.

The Final Report and Price Determination were accompanied by a Media Release.

Notice of the making of the Price Determination was also published in the regional Tasmanian newspapers and in the Tasmanian Government Gazette.

Following release of this Final Report and Price Determination, TasWater is required to submit its revised Price and Service Plan for the Economic Regulator's approval. The revised PSP must comply with the requirements set out in the Economic Regulator's Final Report and Price Determination.

Subject to the Economic Regulator's approval, the prices and service standards outlined in TasWater's final PSP will commence on 1 July 2018.

Copies of the individual components of the Final Report are available here:

  Executive summary   (533Kb)

  Overview of Impact of Economic Regulator’s Decisions on TasWater’s Maximum Allowed Regulated Revenue   (332Kb)

   Summary of the Economic Regulators Decisions   (465Kb)

  Issues outside the Scope of the Investigation   (387Kb)

  Chapter 1 - Introduction   (486Kb)

  Chapter 2 - Customer and stakeholder consultation   (452Kb)

  Chapter 3 - Regulatory compliance improvement   (581Kb)

  Chapter 4 - Customer service standards, contract and policies   (707Kb)

  Chapter 5 - Demand forecasts   (422Kb)

  Chapter 6 - Capital expenditure   (734Kb)

  Chapter 7 - Operating expenditure   (984Kb)

  Chapter 8 - Regulatory depreciation   (682Kb)

  Chapter 9 - Weighted average cost of capital   (475Kb)

  Chapter 10 - Return on capital   (403Kb)

  Chapter 11 - Revenue requirement   (444Kb)

  Chapter 12 - Pricing structure   (697Kb)

  Chapter 13 - Prices and customer impacts   (901Kb)

  Appendix 1 - Price Determination   (779Kb) 

  Appendix 2 - Customer contract   (885Kb)

  Appendix 3 - Trade waste policy   (469Kb)

  Appendix 4 - Land development policies   (636Kb)

  Appendix 5 - Water and sewerage network and charges policies   (777Kb)

  Appendix 6 - Diagram of asset management system elements   (364Kb)

  Appendix 7 - List of TasWater’s capex projects for the second regulatory period   (385Kb)

  Appendix 8 - List of TasWater’s capex projects for the third regulatory period   (365Kb)

  Appendix 9 - Comparison of equivalent tenement rates for the second and third regulatory periods   (564Kb)

  Appendix 10 - Departures from the NSW Water Directorates Equivalent Tenement Guidelines   (441Kb)

  Appendix 11 - Summary of Submissions received on the Draft Report   (395Kb)

​Draft Report and Draft Price Determination

On 30 November 2017, the Regulator released a Draft Report (7Mb) including Draft Price Determination for the three-year regulatory period from 1 July 2018 to 30 June 2021.

The Regulator also issued a media release in relation to its Draft Report and Draft Price Determination and published a Notice inviting interested parties to make submissions to the Regulator in relation to the Draft Price Determination.

Copies of the individual components of the Draft Report together with the Draft Price Determination are available here:

  Acronyms and glossary   (423Kb)

  Executive summary   (634Kb)

  Summary of Regulators Decisions   (457Kb)

  Overview of impact on TasWaters maximum allowed regulated revenue   (487Kb)

  Chapter 1 - Introduction   (500Kb)

  Chapter 2 - Customer and stakeholder consultation   (468Kb)

  Chapter 3 - Regulatory compliance improvement   (727Kb)

  Chapter 4 - Customer service standards, contract and policies   (743Kb)

  Chapter 5 - Demand forecasts   (517Kb)

  Chapter 6 - Capital expenditure   (801Kb)

  Chapter 7 - Operating expenditure   (907Kb)

  Chapter 8 - Regulatory depreciation   (655Kb)

  Chapter 9 - Weighted average cost of capital   (631Kb)

  Chapter 10 - Return on capital   (468Kb)

  Chapter 11 - Revenue requirement   (579Kb)

  Chapter 12 - Pricing structure   (730Kb)

  Chapter 13 - Prices and customer impacts   (714Kb)

  Appendix 1 - Draft Price Determination   (684Kb)

  Appendix 2 - Customer contract   (813Kb)

  Appendix 3 - Trade waste policy   (428Kb)

  Appendix 4 - Land development policies   (617Kb)

  Appendix 5 - Water and sewerage network and charges policy   (722Kb)

  Appendix 6 - Diagram of Taswaters asset management system elements   (365Kb)

  Appendix 7 - List of TasWaters capex projects for the second regulatory period   (361Kb)

  Appendix 8 - List of Taswaters capex projects for the third regulatory period   (349Kb)

  Appendix 9 - Comparison of equivalent tenement rates for the second and third regulatory periods   (526Kb)

  Appendix 10 - Departures from the NSW Water Directorates Equivalent Tenement Guideline   (418Kb) 

The Draft Report and Draft Price Determination were based on the Regulator's preliminary assessment of TasWater's proposed Price and Service Plan for the third regulatory period.

Central to the Regulator's approach was to ensure that TasWater's annual maximum allowed regulated revenues were based on efficient costs. To assist in this task, the Regulator engaged a third party consultant, Arup Group (Arup), to undertake an independent review of TasWater's proposed operating and maintenance expenditure and capital expenditure. Arup’s Draft Report was submitted to the Regulator in October 2017.

Submissions on the Draft Report and Draft Price Determination closed on 25 January 2018. The Regulator received the following submissions in response to the Draft Report and Draft Price Determination:

  Department of Health & Human Services Submission PSP3   (84Kb)

  EPA Submission PSP3   (792Kb)

  TasCOSS Submission PSP3   (880Kb)

  TasWater Submission PSP3   (1Mb)

  TasWater Supplementary Submission PSP3   (838Kb)

  Bob Harder Submission PSP3   (127Kb)

  Malcolm Eastley Submission PSP3   (424Kb)

  Kevin Close Submission PSP3   (134Kb)

  R B Manson Submission PSP3   (702Kb)

  Emily Devine Submission PSP3   (369Kb)

  Nekon Pty Ltd Revised Submission PSP3   (1Mb)

  John Marrone Submission PSP3   (109Kb)

  Graeme Wathen Submission PSP3   (409Kb)

  Catherine Reynolds Submission PSP3   (104Kb)

To support stakeholder participation in public consultation, the Regulator also developed a series of fact sheets on topics that have arisen during the course of the investigation. The fact sheets are available here:

  Fact Sheet - Proposed prices PSP3   (242Kb)

  Fact Sheet - Uniform pricing PSP3   (245Kb)

  Fact sheet - Service charges on unconnected properties PSP3   (369Kb)

  Fact sheet - Trade waste and equivalent tenements PSP3   (396Kb)

  Fact sheet - Price determination process PSP3   (242Kb)

  Fact sheet - Fixed variable charge split PSP3   (233Kb)

On 17 November 2017, the Regulator received a submission from Nekon Pty Ltd (Nekon) relating to TasWater’s approach to trade waste management and pricing. Due to the timing of the receipt of Nekon’s submission, the Regulator was unable to consider the issues that Nekon had raised prior to releasing its Draft Report. The Regulator will take into account Nekon’s submission, along with any other submissions made during the public consultation period, when preparing its Final Report. Nekon’s submission is available here:

  Nekon Pty Ltd Submission PSP3   (1Mb)

Proposed Price and Service Plan

As required under the Price and Service Plan Guideline TasWater submitted its proposed Price and Service Plan on 30 June 2017.

A copy of the proposed plan is available here:

  TasWater proposed Price and Service Plan for the third regulatory period (1 July 2018 to 30 June 2021)   (7Mb)​

Notice of intention to conduct a water and sewerage price determination investigation and make a price determination

On 1 July 2017 the Regulator notified stakeholders that it intended to conduct a water and sewerage price determination investigation and make a price determination.

On 16 June 2016, the Regulator notified TasWater of the requirement to submit, by no later than 30 June 2017, its proposed Price and Service Plan for the third regulatory period.

Duration of the third regulatory period

On 22 June 2016, the Regulator declared that the duration of the third regulatory period would be three years from 1 July 2018 to 30 June 2021. 

Back Home