Gladstone Area Water Board prices for 2015-20

Gladstone Area Water Board prices for 2015-20

29 May 2015

Water MEDIA RELEASE

GAWB supplies water from Awoonga Dam to industrial customers and the Gladstone Regional Council (GRC).

"Price monitoring gives GAWB and its customers an independent assessment of how GAWB is managing its costs and whether its proposed revenue for the next five years is reasonable," said QCA Chairman Malcolm Roberts.

"Price monitoring is not price setting.  GAWB can accept or reject the QCA's findings when it sets prices. 

"The value of price monitoring is that it requires monopoly businesses to show that their prices reflect prudent and efficient costs.  When prices are higher than indicated by price monitoring, a business will need to justify the difference to its customers. 

"Over the last 9 months, the QCA has worked closely with GAWB and its customers.  In its initial proposal, GAWB forecast a revenue requirement of $428 million for 2015-20.  

"The QCA is satisfied that $351 million of this revenue is prudent and efficient.  We believe that almost $77 million should be removed from GAWB's revenue forecast.  GAWB has accepted nearly all these savings. 

"The most significant change is the rate of return calculated by the QCA.  We have updated GAWB's original estimate (based on data available in September 2014) to reflect the latest market conditions.  GAWB has accepted this lower rate of return, reducing its proposed revenue by $38 million.

"The QCA and GAWB differ on the proposed offline storage project.  The QCA believes that this project is not the least-cost option.  We estimate that an alternative solution could save $8 million from GAWB's $98 million capital budget.  GAWB is concerned that the QCA's option has safety risks and prefers the offline storage project.  Adopting the more expensive project would increase charges in the Awoonga to Toolooa Zone in 2015-16 by 1.3%. 

"To help customers, the QCA is releasing estimates of 2015-16 prices for all of GAWB's price zones.  These estimates indicate that prices will fall by between 11 and 39% if all of the QCA's findings are adopted.

"The QCA appreciates the co-operation of GAWB staff and customers during the price monitoring investigation. 

"Residential customers in Gladstone should note that the GRC sets their retail prices, with GAWB charges for bulk water only one part of the final bill.
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