Final Report: Monitoring of SEQ water retailers 2013-15

The Queensland Competition Authority (QCA) today released its final 2013–15 price monitoring report for Unitywater, Queensland Urban Utilities, Logan Water, Redland Water and Gold Coast Water.

“The QCA monitors water retailers to ensure that these monopoly businesses are not using their market power to set unjustifiably high prices. Price monitoring provides an independent assessment of whether retailers are managing their costs efficiently and recovering no more than the revenue required to sustain their businesses,” said QCA Chairman Malcolm Roberts.

“For four of the five businesses, their revenue is less than what the QCA calculates to be the cost of delivering their services. The four retailers – Unitywater, Queensland Urban Utilities, Logan Water, and Gold Coast Water – are not recovering all their prudent and efficient costs.

“This finding should reassure customers that market power is not being misused,” said Malcolm Roberts.

In the case of Redland Water, the QCA has a more qualified finding.

“In 2013–15, revenues for Redland Water are 9.3% above the QCA’s estimates of prudent and efficient costs. The QCA recognises that this over-recovery is deliberate as Redland Water plans to over-recover costs (until 2016–17) and then set prices below costs.

“The QCA supports price smoothing to avoid sharp fluctuations in prices. However, the QCA has concerns about aspects of the Redland Water approach. Redland Water has advised it will take the QCA’s concerns into account when setting 2014–15 prices,” said Malcolm Roberts.

“Water prices in 2013–15 have been affected by many factors including bulk water charges, changes to State and local government rebates, and changes to tariffs.

“The QCA believes it is important that customers understand how all these factors affect their final bill.

“As the point of contact with customers, retailers should explain the changes in each component of the bill as well as the overall change,” said Malcolm Roberts.

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