Potable water is currently being consumed in the Sydney Basin at a level above the sustainable supply from existing infrastructure. The New South Wales Government is working to address this supply/demand imbalance through a range of responses, including demand management programs and securing additional supplies within urban areas.

The NSW Government has asked the Tribunal to investigate and report on the use of pricing structures to reduce demand for water in the Sydney Basin (the full Terms of Reference for the review are included in Appendix 1). This investigation is a prelude to the next pricing review for the metropolitan water agencies including Sydney Water Corporation (Sydney Water) and Sydney Catchment Authority (SCA) which will set prices to apply from July 2005.