At its September meeting, the Board of Goulburn-Murray Water (G-MW) deferred setting a start date for the implementation of basin pricing to allow time for the development of a transition strategy that addresses a range of evolving issues and customer needs.
According to G-MW chairman Stephen Mills basin pricing will impact on some customers and the challenges need to be identified and a program put in place to ensure the issues are appropriately managed during transition.
"The Board of 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. At our September meeting we have renewed our commitment to work through these issues with customers before we set any dates for implementation," said Mr Mills.
At present, G-MW 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 system. A similar process is used to pool and average costs for storages on the Murray, Ovens and King basins to create a Murray system price.
"G-MW management will continue consultations with WSCs, and the Board will reconsider implementation timeframes for basin pricing once the transition strategy has been finalised" said Mr Mills.
G-MW engaged expert independent consultants to review its pricing policies in 2005. This resulted in a number of recommendations for changes to pricing for delivery services in irrigation areas which have been implemented with widespread support from customers. The 2005 review also recommended that G-MW move from system pricing for bulk water to pricing based on the actual cost in each basin.
Since agreeing in 2007 to move to basin pricing, G-MW board and management have undertaken a range of consultation with Water Services Committees (WSCs) to identify the full range of potential impacts, with WSCs providing submissions to G-MW in August that detailed issues to be address before implementation could occur. Most recently, members of the Board met with representatives from the Water Service Committees to further explore their concerns.
In developing a transition program, G-MW will also consider issues associated with environmental entitlements and inter and intra basin trading, undertake further consultation on cost models and cost apportionment arrangements with its customer committees and take account of emerging ACCC directions and developments that may impact on G-MW's future pricing paths. The Board of G-MW also decided that once a date is agreed, implementation will take place simultaneously across all basins.
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