Water pricing principles

Status
In effect

Pricing principles outline how to convert costs into prices.

The QCA’s pricing principles can be a guide for water businesses and users in Queensland, for testing whether prices are appropriate, without the need for a formal regulatory review.

Our pricing principles for the water sector also provide guidance about how to recover the costs of water services from users.  

They are intended to reduce the possibility of unfair prices, inappropriate quality or restrictions on efficient access to facilities.

Our final report was published in December 2000.

These pricing principles largely reflect outcomes associated with the operation of competitive markets but also seek to take account of a wide range of other public interest matters. We considered that prices should be cost-reflective and forward-looking, ensure revenue adequacy and promote sustainable investment.

Prices should reflect the long-run marginal cost of service provision. We concluded that where such prices do not achieve revenue adequacy,  two-part tariffs will be appropriate for most water businesses.

Principles principles require the consideration of a number of technical matters.

We commissioned reports from various consultancies (available below) to contribute to the development of a consolidated statement of pricing principles.

In 1999, the Queensland Government was considering a proposal to extend the prices oversight responsibilities of the QCA to the water sector, including local government water business activities.

In order to facilitate effective implementation of these new duties, the QCA was directed by the government to prepare a report on water pricing principles, and in particular, on pricing issues for local government.