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FACT SHEET
WATER AND SEWERAGE INDUSTRY AMENDMENT BILL 2011
The Water and Sewerage Industry Amendment Bill 2011 amends the Water and
Sewerage Industry Act 2008 to ensure that customers are protected from
unnecessary price increases and that the corporations remain sustainable once
independent price regulation begins on 1 July 2012.
The draft Bill amends the pricing principles in the Water and Sewerage Industry
Act to reduce the allowable return on assets transferred under Part 3 of the
Water and Sewerage Corporations Act 2008 from councils to the corporations
prior to 1 July 2011. The return allowed on these assets is reduced from a full
commercial rate to a rate that allows a pre-tax return on equity of 3 per cent (not
including inflation), based on an industry benchmarked level of debt and equity.
This level of return is roughly equivalent to the historical returns made by the bulk
water authorities and will reduce the implied price increases to about half the
level which would otherwise be required by the legislation.
The draft Bill also amends the Act to clarify that prices may transition to the cost
reflective prices required by the pricing principles over a period determined in
regulations. This provides the flexibility to determine the transition period based
on prevailing circumstances, including the impact on customers and the financial
position of the corporations. This will ensure that prices can transition over time
to cost-reflective levels and eliminate any uncertainty that prices need to jump
very significantly from 1 July 2012. The Regulator must publish its reasons for not
applying any pricing principles.
The draft Bill also amends the Water and Sewerage Industry Act to allow and
facilitate water and sewerage officers to issue infringement notices for offences
relating to water and sewerage infrastructure and regulated services.
The draft Bill also makes technical amendments to the definition of "customer" in
the Act to include owners and occupiers of strata title properties who are not
otherwise included.
The water and sewerage corporations, the Owner Representatives of the
regional corporations, the Office of the Tasmanian Economic Regulator, the
Department of Primary lndustries, Parks, Water and Environment, the Recorder
of Titles and the Senior Strata Adjudicator have been consulted in relation to the
proposed amendments.