Eurobodalla Integrated Water Cycle Management Strategy

Eurobodalla Integrated Water Cycle Management Strategy
ESC’s strong belief that water conservation can be promoted through appropriate pricing
has been put into practice with the progressive increase in water prices over a number of
years. Water pricing has increased by 5c/kL/a over the past five years. However, ESC also
recognises that it is desirable to have prices cost-reflective to ensure that those consumers
on low incomes and businesses (and associated employment opportunities) are not
disadvantaged. Current water prices are not sufficient to promote conservation practices by
affluent water customers, and also do not adequately reflect the externalities of water use
such as the cost to the shire for environmental degradation caused by volume extractions.
There are novel approaches to water pricing currently being trialled water authorities both in
Australia and overseas that may bring about reductions in water demand. Two tier water
usage charges can be introduced that have a lower charge below a certain limit and an
increased charge for higher users. The charges can be set so that low income earners are
not disadvantaged and that the more affluent customers have an incentive to use water
more efficiently.
Another pricing option available to Council may be to provide increased water usage
charges during periods of peak demands or periods of hot, dry weather. Eurobodalla Shire
has a large influx of holiday-makers during the summer period and these people may not be
as sensitive to the local water conservation issues as permanent residents. Therefore
introducing increased water prices during these periods could provide a strong message to
all water users that water demands need to be reduced.
Council will need to couple any price increase with an extensive educational campaign to
explain the reasons behind these decisions and the benefits to the community and to the
environment.
Water pricing is an important demand management tool. Under NSW Water Supply
Sewerage and Trade Waste Pricing Guidelines (DLWC), water usage charges should
provide users with the appropriate pricing signal. Under best-practice pricing principles, the
price should reflect the long run marginal cost (LRMC) of the water supply system.
Marginal cost calculations result in a usage charge/kL that reflects the cost of supply. The
current usage charge is 65c/kL which is significantly lower than the LRMC. This results in
inefficient use of water resources and leads to a number of cross-subsidies between water
users. It is estimated that a real increase in the usage charge to around $1.20/kL is
appropriate, with a significant decrease in the fixed access charge. The increased usage
charge will result in a reduction in demand of approximately 0.11ML/day.
Transition to the new pricing structure can be immediate, with the fixed charge being
reduced at the same time to maintain Council's revenue base at an appropriate level. To
minimise anxiety in the community, it should be explained that as both the usage charge
and fixed charge are being adjusted, average water bills will remain at current levels. It
should also be emphasised that low and moderate water users will benefit from the pricing
adjustment and that all users will benefit from the demand reduction effect of the change
through lower treatment and transfer and capital investment costs that will be passed onto
consumers through lower water bills.
8.1.9 Water Waste Ordinance Opportunity
Water waste ordinance can be viewed as a method of water conservation, however
because of limited community acceptance should only be introduced out of necessity.
Members of the community may consider restrictions as an imposition and take up an
emotive debate over their introduction. Water restrictions can adversely impact upon the
high proportion of retirees in the area who spend a large amount of their leisure time
gardening. Allegations may also be made by the community that inadequate management
of the water resources has lead to the need for water restrictions. Therefore it is important
that a rational, thorough and transparent decision-making process is followed and that the
conclusions reached are conveyed to the community.
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