Updated
The ACT's pricing watchdog is proposing big cuts to household water and sewerage charges.
The Independent Competition and Regulatory Commission (ICRC) will decide how much Canberra's water provider ACTEW can charge for its regulated water and sewerage services from July.
Its draft report recommends per kilolitre charges for water be reduced by 16.9 per cent while sewerage costs be cut by 24 per cent.
That could reduce the combined bill for a typical Canberra household by 19 per cent or $230 per year, or about $4.42 per week.
Senior commissioner Malcolm Gray says several changes would make that possible.
"We haven't included any recovery of the revenue shortfall, the $238 million that ACTEW was seeking, and we haven't increased capital charges in the way they were asking," he said.
The changes come after the commission conducted a 'root and branch' assessment of past regulatory arrangements.
It found prices charged by publicly owned companies need to be considered differently to those charged by privately owned operations.
"The precise size of the price reductions delivered in the final report will be influenced by submissions we receive on this draft report," Mr Gray said.
Regulatory changes
The commission is also recommending substantial changes to the regulatory framework, including separating ACTEW's water and sewerage service business from its energy business.
The key recommendations are for prices to be determined every two years, with ACTEW's business strategies to be reassessed when prices are set, and for ACTEW's cost of capital to reflect its actual borrowing costs.
"While these recommendations are entirely a matter for Government consideration, we believe their adoption would would support the delivery of more efficient water and sewerage services in the Territory," Mr Gray said.
The commission has not agreed to proposals in ACTEW's submission which would have required future water prices to recover revenues ACTEW was expected to achieve in the current period.
Mr Gray says the ICRC does not see any merit in raising water prices for future water users to recover the consequences of lower than expected water sales over the last five years.
He says the commission is instead proposing an adaptive regulatory arrangement that will in future better determine prices to recover ACTEW's capital and operating costs.
'Job losses, budget pressure'
The ACT Government has broadly welcomed the draft report, while warning it could mean job losses and budget pressure.
Treasurer Andrew Barr says he is yet to work through the report's detail but there are sensible recommendations.
"The trade-offs associated with this will be presumably a reduced revenue stream to ACTEW. It may result in job losses within that organisation and it certainly will impact on the dividend that they pay to the Territory Government," he said.
"I don't know yet what that impact will be because further detailed modelling will have to be undertaken."
Topics: water-supply, water-management, act, canberra-2600
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