SEQ Price Monitoring 2013-15

SEQ Price Monitoring 2013-15

  • Final Report
  • Draft Report
  • Return on capital
  • Project Information

The QCA has released its Final Report on the prices, costs and revenues of five south east Queensland retailers – Unitywater, QUU, Logan Water, Redland Water and Gold Coast Water.

The Final Report is in two parts:

  • Part A provides an overview of key findings across south east Queensland.
  • Part B is comprised of five reports, one for each retailer under review.

Fact sheets which help to explain the Final Report have been developed. Submissions on the Draft Report are also available.

Following publication of the Final Report, the QCA has issued errata to correct for data errors in information submitted by Redland City Council and Unitywater.

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We released a Draft Report on the prices, costs and revenues of Unitywater, QUU, Logan Water, Redland Water and Gold Coast Water on 31 January 2014.

The Draft Report was in two parts:

  • Part A provided an overview of key findings across south east Queensland.
  • Part B is comprised of five reports, one for each retailer reviewed.
    Reports on the prudency and efficiency of operating and capital costs from our consultant (SKM) are also provided below, along with fact sheets which help to explain the Draft Report.

Submissions in response to the Draft Report closed on 28 February 2014.

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We estimated a benchmark Weighted Average Cost of Capital (WACC) of 6.57% (post-tax nominal) for the 2013-15 price monitoring period. This WACC was used to calculate the maximum allowable revenue in our price monitoring reports. However, the retailers retain control over their actual WACC assumptions and prices. 

 

2010-13

2013-15

Risk-free rate
4.91%
2.76%
Market risk premium
6.0%
6.0%
Debt beta 0.11 0.11
Asset beta 0.35 0.35
Equity beta
0.66
0.66
Cost of Equity
8.85%
6.69%
Debt margin
4.78%
3.73%
Cost of Debt
9.69%
6.49%
Capital structure (% debt) 60% 60%
Benchmark WACC
9.35%
6.57%

The QCA's WACC estimate draws upon the analysis in Appendix B: WACC in our Price Monitoring Final Report for 2010-11. The QCA has updated the risk free rate and the cost of debt parameters based on independent advice (see below).

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The QCA has monitored the price of water and sewerage services in south east Queensland for the two year period commencing 1 July 2013.  

These services are provided by five monopoly providers: Unitywater, Queensland Urban Utilities (QUU), Gold Coast City Council, Logan City Council and Redland City Council.

The Ministers directed us to:

  • provide information to customers about the costs of providing services
  • treat bulk water costs as a ‘cost-pass-through’ item
  • monitor the change in prices for residential and non-residential customers
  • monitor revenues against costs
  • monitor the entities' rates of return against a benchmark Weighted Average Cost of Capital (WACC). 
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  • February 2013
  • 30 June 2013
  • 30 September 2013
  • 31 January 2014
  • 31 March 2014
Project Timeline

Ministers' Direction Notice

This project is complete

 

 

 

Project Timeline

Submissions received from Queensland Urban Utilities and Unitywater

This project is complete

 

 

Project Timeline

Submissions received from Logan Water, Gold Coast Water and Redland Water

This project is complete

 

 

Project Timeline

Draft Report

This project is complete

 

 

 

Project Timeline

Final Report

This project is complete

 

 

 

Report & Papers