The ACT Auditor General has released the report of a performance audit into the water and sewerage pricing determination process in the ACT.
John Knox, Managing Director of ACTEW has acknowledged the complexity of the performance audit, and the thorough manner in which it was undertaken.
“This is a comprehensive report and has validated the concerns that we had about the pricing determination process,” Mr Knox said.
“In recognition of the seriousness of the assertions made by the ICRC, the Auditor General decided to conduct a performance audit in relation to the matters raised.”
“It is important to note at the outset that assertions made against ACTEW were found to be unsubstantiated,” he said.
The ACT Auditor General’s report:
- dismisses serious assertions against ACTEW
- acknowledges shortcomings of the ICRC pricing determination process
- highlights the need for clarity in the ICRC Act for future pricing determinations
- seeks a review of the water and sewerage pricing framework.
“The performance audit makes a number of recommendations about refining and improving the water and sewerage pricing determination process going forward,” Mr Knox said.
“It’s clear that the pricing determination process needs an overhaul, and the ACT Government‘s responses in the audit report clearly acknowledge this.”
“The most recent pricing determination has left us with a highly uncertain future price path for our customers in the medium term,” Mr Knox said.
This is supported by a report from NERA Consulting, which stated that the decision has left us with “a highly uncertain basis on which to plan the operation, investment and financing decisions that are necessary to run an efficient, effective water services operation.”
Mr Houston (Nera Economic Consulting 2013) also stated that the “ICRC’s decision is close to the low water mark in terms of the relatively poor process that it has adopted.”
“ACTEW remains totally committed to its decision to seek a review of the recent determination, and the ACT Auditor General’s performance audit outcome fully endorses our actions.”
“ACTEW lodged an application for a review of the pricing decision in September 2013, this review now needs to progress as quickly as possible.”
“Meanwhile, just 17 months after receiving a six year price determination, we are required to participate in a biennial review using the current onerous, costly and flawed process.”
“Customers can be assured that our prices are valid for the 13/14 financial year, and we would apply the CPI increase for the 14/15 year, while we await the outcome of the review.”
“It’s important that we have a more certain framework going forward for both ACTEW, and most importantly our customers with regards to our pricing.”
“We look forward to prompt government action to address the recommendations in the audit report so we can continue our focus on becoming the best water utility in Australia,” Mr Knox concluded.