Review of prices for the Water Administration Ministerial Corporation

280 IPART Review of prices for the Water Administration Ministerial Corporation
Table H.1 Stakeholder comments and IPART’s response
Issue
IPART response
Issues specific to water management services and the WAMC regulatory framework
Stakeholders support a longer price
determination period commencing 1
July 2011
Stakeholders suggest IPART needs to
improve NOW’s accountability and
propose some options to achieve this
Stakeholders are concerned that
NOW’s performance will not improve
– they suggest that price increases
should only be implemented once
there is evidence of improvement
One stakeholder raised the issue that
regional water utilities are charged
for extractions, but are not
reimbursed for water that is returned
to the river system
IPART has considered NOW’s proposal and stakeholders’ views on the appropriate length and start date of the determination
period. We concluded that a 3-year determination period best balances the benefits and risks. The 3-year-determination
period lowers regulatory costs for stakeholders and NOW, but also reduces the risk associated with variation between the
forecast costs and revenue assumed in making the determination, and actual costs and revenue due to such factors as the
Murray-Darling Basin Plan. (See section 2.1)
IPART concluded that a start date of 1 July 2011 was most practical given that the need for us to ‘stop the clock’ earlier in our
review had made a 1 July 2010 start date impossible. This start date avoids practical difficulties associated with changing
prices mid-way through a billing cycle, but also signals to NOW the importance of providing accurate, comprehensive and
timely information. (See section 2.1)
IPART has made recommendations to the Minister for Water that NOW improve its consultation with users as well as the
capacity of its financial systems to report its monopoly activities by activity, water source and valley, and implement formal
ring fencing provisions for its non-monopoly services. In addition, IPART expects NOW to report annually against its
expenditure, revenues and service order outputs. (See chapter 13)
Several stakeholders have expressed concern with the price increases under the Draft Determination, in light of identified
deficiencies with NOW’s systems and performance. The Minister for Water has indicated that NOW will be required to address
issues raised by IPART with regard to improving the financial administration of its regulated entities. IPART has emphasised
the importance of NOW improving its performance in key areas, including public reporting, stakeholder consultation, asset
management and capital planning, cost allocation and forecasting. IPART has also highlighted the likely relationship
between improvements in these key areas and future assessments of efficient expenditure in its Report. (See section 3.5 and
chapter 13). In addition, IPART has established a reporting framework to monitor performance for the 2011 Determination
period that may also serve as a baseline for future price reviews.
One of 10 outstanding operational policies that NOW has undertaken to deliver over the 2011 Determination period relates to
Return Flow Credits. (See chapter 3)
H Summary of IPART’s response to issues raised in
stakeholder submissions