“This decision reflects the increased costs of supplying water in periods of scarcity, and provides a stronger reward to households who conserve water in drought,” Paul Paterson, IPART’s chair, said. “The drought price provides stronger incentives for customers to conserve water when it is most scarce, without locking in higher prices when dams are full.”
The new pricing structure will support the $4.6 billion Sydney Water plans to spend during the next four years on new infrastructure. That outlay is about 43 per cent more than it spent in the previous four years, the regulator said.
The drought price trigger is unlikely to be needed in the near term, with dam levels above 80 per cent. Still, IPART opted not to follow Victoria, south-east Queensland and Western Australia and introduce a so-called Inclining Block Tariff to charge households more when they exceed certain amounts of water use.
“Price isn’t a very good tool for making people use less water in their homes,” Stuart Khan, a water specialist at the University of NSW, said. “Maybe it helps to justify [Sydney Water’s promotion of] water conservation and frugal water use if there’s no economic disincentive for them.”
Professor Khan said it was more notable that IPART was persuaded by Sydney Water that it needed a significant ramp-up in spending. “This is a consequence of it becoming increasingly clear that Sydney needs to invest in more long-term sustainable water supply infrastructure,” he said.
Separately, the Murray Darling Basin Authority has given a mixed review of progress in the implementation of the $13 billion basin plan.
In its half-yearly update, the Authority said efforts to introduce metering and measuring of the amount of water extracted in the northern basin was slow and uneven.
“Robust and transparent compliance measures like metering and monitoring are key to building confidence that water users are doing the right thing and the states need to show more willingness to act in this area,” Phillip Glyde, the authority’s chief executive, said.
Also of concern was that states are yet to finish some of the main projects even though their water savings had already been booked.
“Of the 36 on-ground projects to modernise the river, 30 have progressed or are complete, while six are not on track and are at significant risk of delay,” Mr Glyde said. These projects are all supposed to be completed by 2024.
Peter Hannam writes on environment issues for The Sydney Morning Herald and The Age.