Review of prices for the Water Administration Ministerial Corporation

2 Overview of the approach we used to set NOW’s prices
2.4 Decide on consent transaction charges
Consent transaction charges are intended to recover NOW’s efficient costs of
assessing and issuing water access licences (granting rights to a share of available
water) and works approvals (granting approval for the construction of water
management works, such as bores, dams, etc).
Consent transaction charges are based on forecasts of the labour hours needed to
complete a transaction and the cost of that labour. In setting these charges, we
assessed whether:
the times proposed by NOW to complete the transactions were reasonable and
efficient, by examining the tasks associated with completing consent transactions
the forecast costs of the labour used in completing consent transactions was
consistent with the demands and level of complexity of the different types of
transactions that NOW undertakes.
Our decisions on consent transaction charges are discussed in Chapter 11.
2.5 Assess the impact of our pricing decisions
In setting prices, we aimed to balance the need for NOW to recover its efficient costs
of undertaking its water management activities with the goal of achieving fair and
acceptable outcomes for all stakeholders. For example, we aimed to minimise price
shocks and adverse impacts on water users and to ensure that users funded no more
than their appropriate share of water management costs, while ensuring that NOW
remains financially viable. Therefore, in assessing the impact of our water
management pricing decisions, we focused both on potential impacts on water users
and on NOW’s forecast level of cost recovery.
In assessing the potential impact of water management prices on users, we
considered forecast sample water bills, and estimates of water bills as a proportion of
farm costs. We also considered the ability of water users to mitigate the impact of
higher water management prices through trading entitlements.
In the Draft Report, IPART requested further information about NOW’s metering
program as insufficient information had been provided to make assessments about
customer impacts. More information has been provided and our analysis of the
impact of metering service charges for small users is contained in Chapter 12. As
discussed in Chapter 13, IPART is concerned by the customer impacts of the goal to
meter 95% of licensed entitlement. IPART urges NOW to urgently undertake costbenefit
analysis of this goal and to make changes to the design of its metering
program as warranted. It is recommended that the cost-benefit study is shared with
users and with IPART before the next price determination.
30 IPART Review of prices for the Water Administration Ministerial Corporation