Gladstone Area Water Board 2007-2009

The Gladstone Area Water Board (GAWB) owns the Awoonga Dam on the Boyne River together with a network of pipelines, pump stations, reservoirs and treatment plants. It provides treated and raw water to large industrial customers and power stations and the Gladstone City and Calliope Shire Councils.

The Premier and the Treasurer declared the supply, distribution and treatment of bulk water by GAWB to be government monopoly business activities and referred their pricing practices in respect of these activities to the Queensland Competition Authority for investigation and monitoring.

The Authority undertook two previous investigations of GAWB's pricing practices, in 2000 and 2004, and developed a regulatory and pricing framework consistent with the objectives of monopoly prices oversight.

As part of its strategic water planning, GAWB developed a contingent supply strategy which entails the sourcing of water from the Fitzroy River near Rockhampton as the preferred option. On 23 February 2007 the Premier and the Treasurer referred the declared government monopoly business activities of GAWB to the Authority for investigations regarding the appropriateness of pricing practices related to:

1. GAWB's recovery of proposed preparatory expenditure from existing and future customers, specifically having regard to:
   1. the prudence of GAWB's contingent source supply strategy, including selection of supply from the Fitzroy River as an appropriate contingent source;
   2. the level of efficient costs associated with the development of GAWB's contingent supply strategy that should be included in prices;
   3. the timing of expenditures which are related to the implementation of the contingent supply strategy; and
   4. the means by which efficient costs of the contingent supply strategy should be included in prices for subsequent years.
2. GAWB's proposed criteria for triggering construction of the appropriate augmentation in the event of drought or unexpected additional demand; and
3. GAWB's proposed changes to pricing practices related to declared activities required to enable GAWB to recover its efficient costs of the system as appropriately augmented.