In an attempt to help irrigators cope with a move to cost-reflective prices, the Queensland State Government has accepted the Queensland Competition Authority’s recommendation on Seqwater’s future irrigation prices.
The Queensland Competition Authority provided its final recommendations to the Queensland Government in its Final Report released in May 2013, following an extensive process of reviewing Seqwater’s costs and stakeholder consultation.
The new Seqwater irrigation price path will apply from 1 January 2014 to 30 June 2017.
Water Supply Minister Mark McArdle said the Queensland Competition Authority’s recommended prices were set to recover Seqwater’s efficiency costs as well as smooth-over future price increases.
Proposed changes mean all Seqwater schemes will now have two-part tariffs consisting of a fixed (Part A) price per megalitre (ML) of nominal water allocation and a usage (Part B) price per ML of water use.
For the majority of schemes, the Queensland Competition Authority recommended prices result in increases to fixed prices and reductions in usage prices.
Mr McArdle said the Newman Government would also ensure a Community Service Obligation was in place until 30 June 2017 to help irrigators adjust to cost-reflective pricing.
“Cost recovery of water services will allow Seqwater to remain commercially viable, as well as encourage efficient water use and trading in water entitlements so that the water moves to its highest value use,” Mr McArdle said.
“While prices in some schemes are below cost recovery levels, the Newman Government will subsidise the difference between Seqwater’s revenue from irrigation prices and the revenue required to recover the costs.”
The subsidy, in the form of a Community Service Obligation, will be provided from 1 January 2014 to 30 June 2017.
The Government also accepted the Queensland Competition Authority’s recommendation that – where fixed prices were below the level needed to fully recover costs – the increase should be capped at $2/ML per year plus inflation (2.5%).
Mr McArdle said Seqwater would strengthen its consultation with its irrigation customers in order to better understand their challenges and needs.
“These improvements should help to ensure Seqwater’s irrigation services are prudent and efficient and reflect customer needs,” he said.
Relevant Seqwater Water Supply Schemes (WSS) are:
• Cedar Pocket Dam WSS
• Central Brisbane River WSS
• Central Lockyer Valley WSS
• Logan River WSS
• Lower Lockyer Valley WSS
• Mary Valley WSS
• Warrill Valley WSS
Mr McArdle said the implementation of the new price path would deliver a $1.1 million dollar cost saving.
In April 2012, Seqwater estimated its irrigation costs at $5.6 million for 2013-14.
Mr McArdle said the Queensland Competition Authority reviewed these costs and cost drivers and recommended these costs be reduced to $4.5 million.
“This reflects a $1.1 million saving for irrigators – about 20 per cent,” he said.
More information can be found on the Queensland Competition Authority website including factsheets for each scheme at: http://www.qca.org.au/water/SEQIrrigPrices/