SEQ retail water price monitoring 2013–15

We released a draft report on the prices, costs and revenues of Unitywater, QUU, Logan Water, Redland Water and Gold Coast Water on 31 January 2014.

The report was in two parts:

• Part A provided an overview of key findings across south east Queensland.
• Part B is comprised of five reports, one for each retailer reviewed.
  Reports on the prudency and efficiency of operating and capital costs from our consultant (SKM) are also provided below, along with fact sheets which help to explain the draft report.

Submissions in response to the draft report closed on 28 February 2014.

We estimated a benchmark weighted average cost of capital (WACC) of 6.57% (post-tax nominal) for the 2013-15 price monitoring period. This WACC was used to calculate the maximum allowable revenue in our price monitoring reports. However, the retailers retain control over their actual WACC assumptions and prices.

The QCA’s WACC estimate draws upon the analysis in Appendix B: WACC in our price monitoring final report for 2010–11. We updated the risk free rate and the cost of debt parameters based on independent advice.

We monitored the price of water and sewerage services in south east Queensland for the two year period commencing 1 July 2013.

These services are provided by five monopoly providers: Unitywater, Queensland Urban Utilities (QUU), Gold Coast City Council, Logan City Council and Redland City Council.

The Ministers directed us to:

• provide information to customers about the costs of providing services
• treat bulk water costs as a ‘cost-pass-through’ item
• monitor the change in prices for residential and non-residential customers
• monitor revenues against costs
• monitor the entities’ rates of return against a benchmark WACC.