Goulburn-Murray Water (G-MW) has begun a program of consultation with its Water Services Committees to discuss pricing drivers for 2009/10 season and for the remainder of its 5 year Water Plan that runs through to 2012/13.
According to G-MW Managing Director David Stewart, the advice and input provided by Water Service Committees is a vital step in informing G-MW's understanding of the challenges facing its customers. The process also provides an opportunity for customer representatives to consider the cost drivers for the services they rely on in their area.
The Water Plan once finalised will be reviewed by the Essential Services Commission, the pricing regulator for the water industry in Victoria. Final determination by the Commission will consider all feedback provided and is expected in June 2009.
"This quite lengthy process has begun now so that all the issues can be worked through and we can announce our 2009/10 prices by 30 June 2009," said Mr Stewart.
A key factor impacting on G-MW's pricing outlook is the impact of ‘sub-100%' allocations in most systems for at least the past three seasons.
"The consultation process is an opportunity to discuss with customers the basis for determining prices and sharing costs into the future - particularly when many of the costs are fixed and independent of the volume of customers' entitlements delivered in a season," said Mr Stewart.
Mr Stewart said G-MW recognised the difficulties and pressures faced by its customers.
"Our region and especially our farmers are in the middle of the worst drought we have known, and they are also dealing with the recent drop in dairy prices and poor outlooks for several of our other industry groups. It's not an easy time to discuss future prices. The G-MW Board has proposed a price increase cap on some of the services to assist customers, but it's important we discuss these options because there are ramifications for subsequent seasons' prices," said Mr Stewart.
Last year G-MW issued a 1 year plan for its gravity irrigation areas, and advised customers it would provide projections for future seasons once there were more details about the roll out of the Northern Victoria Irrigation Renewal Project (NVIRP) and its impact on G-MW's existing activity.
"It's early days in what could be a 10 year project, and any forward price projections and potential cost savings are based on a number of assumptions that we will continue to refine in conjunction with NVIRP," said Mr Stewart.
G-MW operates on a full cost recovery basis, with its 40 services requiring around 300 individual prices to reflect the costs associated with providing a particular service to a region or area.
The cost drivers and opportunities to manage these in each of our irrigation areas and for our diversions customers are very different and the final outcomes will vary between areas and services," said Mr Stewart.
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