Review of prices for the Water Administration Ministerial Corporation

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B Summary of NOW’s submission to the Issues Paper We have compiled a table of NOW’s Monopoly Service Order outputs (see Appendix L) in order to determine whether NOW is delivering the services that it stated it would provide in its submission to the 2011 Determination. B.5 Projected revenue to be recovered from users versus the broader community/Government NOW proposed full cost recovery of the user share of its revenue requirement. Under NOW’s proposal, revenue from users would increase from $29.23 million in 2006 (as determined by IPART) to $49.5 million in 2010/11 and then $53.4 million in 2012/13. NOW’s proposed water management revenue requirements and the split of these requirements between users and the Government is listed in Table B.3 below. Table B.3 NOW’s revenue requirements for the upcoming determination ($2009/10, million) 2010/11 2011/12 2012/13 User share of revenue needs 49.5 51.3 53.4 Govt share of revenue needs 23.5 24.1 23.7 Revenue needs 73.0 75.3 77.0 Note: Excludes any ‘additional’ cost to NOW of implementing the Commonwealth Water Act (as per IGA). Totals may not sum due to rounding. Source: NOW submission, December 2009, p 48. In the 2006 Determination, when calculating the notional revenue requirement and the split of costs between users and the Government, IPART attributed approximately 65% of NOW’s costs to users. However, after considering the factors contained in section 15 of the IPART Act, IPART set prices so that expected revenue from users was less than this, although prices were set to gradually increase towards full cost recovery. For the 2011 Determination, NOW proposed that prices be set to fully recover users’ share of its water management costs. The sources of NOW’s user share revenue requirement (and hence its proposed price increases) are listed in Table B.1 above. 246 IPART Review of prices for the Water Administration Ministerial Corporation
B Summary of NOW’s submission to the Issues Paper B.6 Consumption forecasts and entitlement basis B.6.1 Consumption forecasts for regulated rivers In the 2006 Determination, IPART applied long-term extraction forecasts extracted from NOW’s Integrated Quantity and Quality Model (IQQM). At that time, IPART decided that, given deficiencies in metering data, IQQM data was more accurate than State Water’s information on actual consumption/extraction. Based on advice received from the Centre for International Economics (CIE) and in conjunction with State Water, NOW argued that consumption forecasts for regulated rivers should be based on the average of the extractions from the last 15 years. This was because this method: is likely to be more accurate accounts for climate change reduces price volatility between price determinations will allow low recent consumption to be better reflected in prices. We note that: for the Final Report of the State Water Determination 2010, IPART decided to use a 20-year moving average of IQQM and actual (or metered) extractions to forecast water consumption for regulated rivers consumption forecasts will not be relevant if IPART adopts NOW’s preferred pricing structure of 100% fixed (per entitlement) charges. B.6.2 Entitlement/consumption forecasts for unregulated rivers and groundwater For the 2006 Determination, metered or other estimates of extractions were not available as a large number of licensees are unmetered. At that time, IQQM data was only available for a small number of unregulated rivers and groundwater sources. This continues to be the case. 218 For the 2006 Determination, forecasts were based on entitlements. In its 2009 submission, NOW provided entitlement volumes for unregulated rivers and groundwater sources. It has not provided consumption forecasts for unregulated rivers and groundwater sources. 218 Email, Chris Ribbons, NOW, 3 February 2009. Review of prices for the Water Administration Ministerial Corporation IPART 247
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Independent Pricing and Regulatory
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© Independent Pricing and Regulato
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Contents 5 Share of NOW’s total e
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1 Executive summary 1 Executive sum
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1 Executive summary IPART has decid
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1 Executive summary Table 1.2 Unreg
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1 Executive summary In setting the
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1 Executive summary 1.3.1 Increases
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1 Executive summary 1.3.2 Increases
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1 Executive summary Increases in
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1 Executive summary 1.3.5 What are
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1 Executive summary Figure 1.1 Deci
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1 Executive summary undertaken co
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2 Overview of the approach we used
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5 Share of NOW’s total efficient
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6 Price Structure 6 Price Structure
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6 Price Structure 6.2 Geographic sp
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6 Price Structure 6.4 The price pat
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6 Price Structure is expected to be
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6 Price Structure 6.6.1 Stakeholder
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6 Price Structure At the Sydney pub
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9 Water management prices Chapter 1
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10 Meter service and reading charge
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Table 11.7 NOW’s estimated hours
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12 Impacts of pricing decisions As
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Page 245 and 246: A List of appendices A List of appe
Page 247 and 248: B Summary of NOW’s submission to
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Page 285 and 286: G Consideration of IPART Act sectio
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Page 289 and 290: Issue IPART response Review of pric
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Page 295 and 296: I Impact of decisions on consolidat
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K Prices in $2010/11 by valley and
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Cost code User share % of user shar
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M Weighted Average Cost of Capital
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N Consent transaction charges Town
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N Consent transaction charges N.2 K
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Table N.2 NOW’s revised estimated
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P Glossary Extractions The taking o
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