Review of prices for the Water Administration Ministerial Corporation

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3 Specific activities included in estimating the costs to be recovered through water management charges – rules and processes for controlled allocation of unassigned water to licensed users – aquifer interference rules and guidelines to inform and manage licensed extractive industries – planning rules for surface and groundwater interception and extraction – rules for stormwater harvesting – rules for groundwater trading in embargoed water sources. ensuring that 90% of transactions for the permanent transfer of access licences are processed within 28 days ensuring that 60% of all other transactions and approvals are processed within 3 months ensuring that 100% of reported compliance breaches are actioned. In the course of this price review, stakeholders have expressed concerns that key outputs of the 2006 Determination period were not achieved. Specifically, stakeholders highlight that only a portion of water sharing plans targeted for completion by 2009 have been gazetted. 44 In addition, in its response to the Draft Determination the Cooma-Monaro Shire Council expressed concerns that the Return Flow Credit Policy had not been completed. In response to the criticism of its performance over the 2006 Determination period, NOW has provided detailed information about its deliverables since 2006. This information is included as Appendix J. In relation to the delivery of water sharing plans, NOW has given the following explanation: One of the criticisms we have had in the past, in terms of completing the submission, is why the water sharing plans were not completed by 2010 as required. As we require $55 million per year for water management activities, that would have enabled 311 staff to be appointed on water management activities, and … because we have not achieved $55 million per year, because the price path to recovery and reduced revenue has been substantially smaller, we have had a commensurate staff of only 256 people, 55 short on requirement. 45 We acknowledge that NOW’s actual revenue has been less than expected over the 2006 Determination period. However, we also note that we set prices to recover the efficient level of costs likely to be incurred in delivering identified services. On the assumption that the Government would fund its share of the efficient costs, we expected the (then) Department of Natural Resources would undertake and deliver the identified activities and services, including the targeted water sharing plans, in accord with the efficient level of cost determined by IPART – even if this required the 44 For example, see submissions from Lachlan Valley Water (June 2010) and the NSW Irrigators’ Council (June 2010). 45 Commissioner for Water (NOW), Transcript of Wagga Wagga Public Hearing, 19 July 2010, pp 11-12. 42 IPART Review of prices for the Water Administration Ministerial Corporation
3 Specific activities included in estimating the costs to be recovered through water management charges achievement of operational efficiencies relative to the Department’s cost proposal to the 2006 price review. For this Determination, IPART has again assumed that NOW will deliver all the proposed water management activities and outputs (set out in the Monopoly Service Outputs Schedule at Appendix L) that underpin the calculation of allowed efficient costs. This is on the assumption that the NSW Government will fund its share of NOW’s efficient monopoly service costs, including our assessment of the Government’s share of NOW’s contributions to the MDBA. IPART’s estimate of the total cost of delivering these water management activities and outputs efficiently is the sum of the forecast revenue to collected from users (via water management prices) and our forecast of revenue to be contributed by the NSW Government. 46 We note that following its response to the Draft Determination, NOW provided a proposed new Appendix L that suggests removal or reduction of some outputs. NOW explained that the proposed revisions were: …what we realistically believe at this stage we can achieve with the funding, but we will agree to strive for the targets IPART has set in Schedule L. A lot depends on circumstances e.g. current floods, and also the extent and effect of any structural changes due to political outcomes. 47 IPART has not accepted these amendments and has retained the original Appendix as was included in the Draft Report. We note that the Appendix is a list of the activities that NOW identified as needed and which underpin NOW’s, PwC and our decisions to increase allowed expenditure. As such, users would reasonably expect that if they, and the Government, provide the revenue to meet efficient levels of expenditure then NOW will deliver the promised outputs or provide sound reasons for varying its activities and outputs over time. Examples of such reasons might include, in times of flood or drought a change in water resource management priorities that result in other unplanned outputs being delivered. As Chapter 13 explains, IPART expects that NOW will report progress against key elements of the Monopoly Service Outputs Schedule annually and against the whole Schedule in its submission to the next price review. IPART will publish NOW’s annual reports. In addition, IPART will publish its assessment of NOW’s performance in an annual report on all IPART-regulated water agencies. Where unforseen events necessitate changes in priorities NOW is expected to provide reasons for variations, including the identification of the new, unplanned outputs. 46 IPART’s calculation of the revenue expected to be provided by the NSW Government is set out in Chapter 1. 47 Email received from NOW, 12 January 2010. Review of prices for the Water Administration Ministerial Corporation IPART 43
Page 1: Independent Pricing and Regulatory
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Page 6 and 7: Contents 5 Share of NOW’s total e
Page 9 and 10: 1 Executive summary 1 Executive sum
Page 11 and 12: 1 Executive summary IPART has decid
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Page 15 and 16: 1 Executive summary In setting the
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Page 29 and 30: 2 Overview of the approach we used
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Page 95 and 96: 6 Price Structure 6 Price Structure
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6 Price Structure The sections belo
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6 Price Structure 6.3.3 IPART’s a
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6 Price Structure We note that this
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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 $60 doesn’t c
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6 Price Structure 6.6.1 Stakeholder
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6 Price Structure In summary CIE co
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6 Price Structure At the Sydney pub
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7 Allocation of the user share acro
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8 Entitlement volumes and usage for
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9 Water management prices Chapter 1
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9 Water management prices Table 9.1
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10 Meter service and reading charge
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11 Consent transaction charges 11 C
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Table 11.7 NOW’s estimated hours
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11 Consent transaction charges NOW
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12 Impacts of pricing decisions As
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12 Impacts of pricing decisions Fig
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13 Reporting framework and other fi
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A List of appendices A List of appe
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B Summary of NOW’s submission to
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C Cost shares adopted by IPART C Co
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D Illustrative example of cost allo
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E Cost recovery by valley E Cost re
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F Consideration of Water Charge (Pl
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F Consideration of Water Charge (Pl
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G Consideration of IPART Act sectio
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H Summary of IPART’s response to
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Issue IPART response Review of pric
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Review of prices for the Water Admi
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I Impact of decisions on consolidat
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J NOW report to PwC on achievements
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The following reports NOW’s achie
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1. Outstanding NWI Activities PROGR
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2. Increased service provision PROG
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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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O Impact of changes to the cost all
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P Glossary Extractions The taking o
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