Cost allocation (Network Access)

The Water Industry Competition Act 2006 (WIC Act) provides for private sector participation and competition in the NSW water and wastewater industry. To facilitate this, infrastructure services can be ‘declared’ under Part 3 of the WIC Act, meaning that a third party must be granted access to these services subject to certain criteria and the establishment of an access agreement or determination.

The provider of a declared service must develop and submit to IPART a cost allocation manual, which sets out how the service provider will allocate costs and maintain separate accounts for each of its declared services. We have released a Cost Allocation Guide to assist service providers in developing their cost allocation manuals.

IPART may approve a service provider’s cost allocation manual as submitted, or may require it to be amended and resubmitted for consideration for approval. Once approved, a service provider may only vary its cost allocation manual with IPART’s consent.

Three of Sydney Water’s sewage reticulation networks (Bondi, Malabar and North Head) have been ‘declared’ from the outset of the WIC Act in August 2008. As per the requirements of the WIC Act, Sydney Water submitted a cost allocation manual to IPART within three months of the commencement of the WIC Act. In July 2018, Sydney Water submitted a revised cost allocation manual for IPART to consider for approval. We are currently seeking stakeholder views on this revised cost allocation manual.