PLANS by Goulburn Murray Water (G-MW) to roll out massive price increases to Broken and Ovens irrigators as part of a shift towards a more user pays system of setting bulk water charges have been temporarily put on hold.
The authority announced last week it was deferring a start date for “basin pricing”, under which storage operating costs for a particular basin would be levied to irrigators served by that storage rather than pooled with other basins’ costs and levied as a uniform average system price as currently occurs.
Instead it will develop a transition strategy to address concerns raised by irrigators including the impact of water trading, reconfiguration and Government water purchases for the environment
It has also pledged to introduce the new pricing regime simultaneously across the region, rather than start with the Broken and Ovens as previously planned.
G-MW chairman Stephen Mills said basin pricing would impact on some customers and the challenges needed to be identified and a transition strategy established.
Only then would dates for rolling out the new system be reconsidered.
"G-MW is keenly aware that basin pricing will fundamentally change the basis for calculating prices, requiring substantial increases for some customers to bring their current charges into line with the actual cost to operate, maintain and replace the dams and storages that supply them,” he said.
“We (will) work through these issues with customers before we set any dates for implementation."
Broken irrigators reacted angrily in July after the authority flagged a 900 per cent rise from $6 a megalitre to around $60/ML for the system’s 170 irrigators to cover the cost of decommissioning Lake Mokoan.
Broken irrigator Ray Henderson said irrigators believed basin pricing was deeply flawed, left a handful of irrigators carrying a disproportionate share of the cost and did not recognise the shift towards interconnected systems or address unresolved issues associated with water trading, reconfiguration and Government water purchases for the environment.
He said irrigators were still thrashing out with Government what a post-Mokoan Broken system would look like so it was impossible to calculate the costs of decommissioning.
But he said G-MW had responded to irrigators’ calls to put the plans on hold until issues could be worked through.
“They have deferred it and you have to give them credit for listening,” he said.
“Nobody wants basin pricing, we’re unanimous on that. But if they are going to go to basin pricing, it must be put on hold until trading rules are established and all the variables are sorted out.
“And it must be done in one go, not just picking off one system at a time.”
G-MW currently pools together its share of the costs for operating storages in the Goulburn, Loddon, Campaspe, Broken and Bullarook basins to produce one average bulk water price for the Goulburn. A similar process sets a Murray system price for irrigators on the King, Ovens and Murray.
It argues that this is inequitable as irrigators on a basin with low storage costs effectively cross subsidise those where costs are high, in the case of the Broken by as much as $1.4m a year.
Following a 2005 Frontier Economics report it commissioned on pricing, the authority announced plans in April last year to move to basin pricing. The introduction of price changes was to be triggered by the need to undertake major works, starting with the Broken as a result of the decommissioning of Lake Mokoan.
Other systems are also in line for increases ranging from 2-300pc on the Campaspe to potentially 3000pc on the tiny Bullarook system, where prices are forecast to rise from $6/ML to above $200/ML if basin pricing goes ahead.
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