The average Melbourne household can expect their water bill to jump by a massive $290 next financial year to pay for the problem-plagued desalination plant.
The city’s three major water retailers - City West Water, South East Water and Yarra Valley Water - have proposed price increases of an average 34 per cent from July as part of their five-year plans.
The price rises, which are largely driven by the cost of the beleaguered Wonthaggi desalination plant, will bring the average annual water bill to $1130, up from $840.
City West Water managing director Anne Barker, who is the industry spokeswoman for water price rises, said the bill increases would recover costs of $650 million due to be paid to Aquasure - the consortium overseeing the desal plant - in 2013. ”More than two-thirds of those price rises is for the desal plant,” she said.
Ms Barker said a price freeze on water bills from July this year had contributed to the large price jump.
In June, the state government belatedly ordered Melbourne Water to return $230 million it had overcharged customers for the operation of the unfinished desal plant by imposing a price rise freeze on household water bills scheduled for July 1.
”Because there was a price freeze on our original determination that gave us a 10 per cent rise this year, unfortunately that has contributed a lot to the size of the increase next year,” Ms Barker said.
She admitted the rise would increase pressure on households already experiencing increases in energy bills.
”There is no doubt this is going to be very hard for a lot of customers … I would encourage any customer who is struggling to pay their water bill to contact their retailer for assistance.”
Gerard Brody, of the Consumer Action Law Centre, urged retailers to support low-income customers.
”This is a significant amount of money, and we are concerned that it may impact particularly on lower-income consumers who are already struggling with bills,” he said.
”We would encourage retailers to ensure those consumers who would experience hardship because of these bills are protected and supported through hardship programs and instalment programs.”
For the remainder of the five-year water plan, to 2017-18, price rises are expected to follow the consumer price index - unless water is ordered from the desalination plant.
”Those prices are based on the assumption that no desal water is ordered,” said Ms Barker. ”However, if we run back into a dry period and storages drop significantly and we do have to order water, then there is a price that we will pass on to customers.”
She said the increase would be between $10 and $50 a household each year, depending on how much water was ordered.
The desal project, which was commissioned by the former Labor government and is expected to cost Victorians up to $24 billion (in nominal dollars) over 28 years, was meant to be producing at full capacity by June 30.
But in late September it was still producing at only one-third capacity.
In September, Mike Jury, the plant director for joint builder operators Degremont Thiess Service said he expected the plant would be completed and ready for full operation by the end of the year.
