Below we present key information on our decisions for Water NSW’s rural bulk water services for customers in the Lachlan valley. This information is not exhaustive and should be viewed in conjunction with our Final Report and Determination. 

Prices for Lachlan valley will increase from 1 October 2021

Under our decisions, Water NSW’s prices will increase as its efficient costs are higher than those used to set prices for the 2017 Determination. The key drivers of these increased costs include that the customer share of:

  • operating expenditure for Lachlan valley has increased by 46% (but by 18.9% less than proposed by Water NSW), mainly due to increased expenditure on asset management planning, flood operations, long term transformational strategy and dam safety compliance. 
  • capital expenditure for Lachlan valley has increased by 128.8% (but by 33.7% less than proposed by Water NSW), mainly due to increased expenditure on dam safety compliance, environmental planning & protection, asset management planning and flood operations. 

Forecast usage volumes are also 11.6% lower than those used for the 2017 Determination, which puts upward pressure on prices.

Offsetting these factors are a lower cost of capital, which has decreased from 3.1% to 1.8%.

Decision on customer share of revenue requirement for Lachlan valley over 2021 Determination

Note: UOM is the payback of "unders and overs mechanism" balance from the 2014-17 regulatory period.

Data source: IPART analysis.

What drives the change in costs for Lachlan valley since the 2017 determination period?

Data source: IPART analysis.

Decision on prices for the Lachlan valley

Under the ACCC rules, we are required to set prices for Water NSW that recover its full efficient costs of providing its bulk water services (net of any Government contributions). 

The table below sets out our decision on Water NSW’s prices, as well as prices that would recover Water NSW’s proposed costs on a full cost recovery (FCR) basis over the 2021 determination period.

Decision on bulk water charges – Lachlan valley ($/ML, $2021-22)

  2020-21 ($2020-21) FCR proposed IPART decision Change 2020-21 to proposed Change 2020-21 to IPART decision Difference between IPART and proposed
High security $16.56 $26.93 $25.10 62.6% 51.6% -6.8%
General security $2.94 $3.98 $3.71 35.4% 26.2% -6.8%
Usage $20.51 $31.82 $31.17 55.1% 52.0% -2.0%

Note: Water NSW’s proposed prices are based on prices that recover Water NSW’s proposed costs over a 4-year period on a full cost recovery basis.

Source: Water NSW proposal and IPART analysis.

Indicative bills under our decisions for the Lachlan valley

The table below shows indicative bills under our decisions, as well as indicative bills that would arise from Water NSW’s proposed prices (based on full cost recovery over 4-years).

Indicative annual bulk water bills for Lachlan valley ($2021-22)

  Estimated entitlements (ML) Estimated usage (% of entitlement) 2020-21 ($2020-21) FCR proposed IPART decision Change 2020-21 to proposed Change 2020-21 to IPART decision Difference between IPART and proposed
High Security
Small user 10 70% $309 $492 $469 59.1% 51.8% -4.6%
Medium user 100 70% $3,092 $4,920 $4,692 59.1% 51.8% -4.6%
Large user 500 70% $15,459 $24,602 $23,460 59.1% 51.8% -4.6%
General Security
Small user 15 30% $136 $203 $196 48.7% 43.6% -3.4%
Medium user 200 30% $1,819 $2,705 $2,612 48.8% 43.6% -3.4%
Large user 1,000 30% $9,093 $13,526 $13,061 48.8% 43.6% -3.4%

Source: Water NSW proposal and IPART analysis.

The indicative bills shown below represent indicative bills combining Water NSW’s prices for its bulk water services and the Water Administration Ministerial Corporation’s (WAMC’s) prices for its water management services.

High security bills for Lachlan valley (medium user)

Note: We used actual entitlement numbers and allocations data in defining “small", "medium" and "large" users. See our WAMC Final Report (hyperlink) for further information on WAMC bills.

Data source: Water NSW proposal and IPART analysis.

General security bills for Lachlan valley (medium user)

Note: We used actual entitlement numbers and allocations data in defining “small", "medium" and "large" users. See our WAMC Final Report (hyperlink) for further information on WAMC bills.

Data source: Water NSW proposal and IPART analysis.

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Water NSW’s proposed costs, prices and indicative bills as presented in our Issues Paper released in September 2020 

Our Draft Report on Water NSW’s rural bulk water prices released in March 2021