Principle 1: Cost recovery full recovery of efficient costs through upper bound pricing. Principle 2: Tariff structures two-part tariffs (service availability and water usage charge) unless demonstrated to not be cost-effective. Principle 3: Cost-reflective tariffs for economic efficiency reasons, water usage charge should have regard to the long-run marginal cost of the supply of additional water (does not preclude inclining block charges where governments seek to promote efficient water use). Principle 4: Setting the service availability charge should recover the difference between revenue collected from variable water charges and developer charges and total revenue requirement. Principle 5: Pricing transparency tariffs should be set using a transparent methodology and subject to public consultation and scrutiny. Principle 6: Over recovery of revenue where water usage charges lead to revenue – recovery in excess of upper bound revenue requirements in respect of new investments, jurisdictions are to address the over recovery. Principle 7: Differential water charges water charges should be differentiated by the cost of servicing different customers where the benefits of doing so outweigh the costs of identifying differences and the equity advantages of alternatives. Principle 8: Setting developer charges charges should reflect the investment in both new and existing assets required to serve a new development and have regard to the way in which ongoing water usage and service availability charges are set. Principle 9: Capping developer charges charges should not exceed the costs of serving new developments, including investment in both new and existing assets. Principle 10: Revenue from developer charges to over-recovery, revenue from developer charges should be offset against the total revenue requirement either by excluding or deducting the contributed assets from the regulatory asset base or by offsetting the revenue recovered using other mechanisms. Source: NRMMC (2010). As the ACT Government is a signatory to the National Water Initiative and the Initiative’s pricing principles, the Commission is required to ensure, to the extent possible, that Icon Water’s water tariff structure is consistent with both.
Principle 1: Cost recovery full recovery of efficient costs through upper bound pricing. Principle 2: Tariff structures two-part tariffs (service availability and water usage charge) unless demonstrated to not be cost-effective. Principle 3: Cost-reflective tariffs for economic efficiency reasons, water usage charge should have regard to the long-run marginal cost of the supply of additional water (does not preclude inclining block charges where governments seek to promote efficient water use). Principle 4: Setting the service availability charge should recover the difference between revenue collected from variable water charges and developer charges and total revenue requirement. Principle 5: Pricing transparency tariffs should be set using a transparent methodology and subject to public consultation and scrutiny. Principle 6: Over recovery of revenue – where water usage charges lead to revenue recovery in excess of upper bound revenue requirements in respect of new investments, jurisdictions are to address the over recovery. Principle 7: Differential water charges water charges should be differentiated by the cost of servicing different customers where the benefits of doing so outweigh the costs of identifying differences and the equity advantages of alternatives. Principle 8: Setting developer charges charges should reflect the investment in both new and existing assets required to serve a new development and have regard to the way in which ongoing water usage and service availability charges are set. Principle 9: Capping developer charges charges should not exceed the costs of serving new developments, including investment in both new and existing assets. Principle 10: Revenue from developer charges to over-recovery, revenue from developer charges should be offset against the total revenue requirement either by excluding or deducting the contributed assets from the regulatory asset base or by offsetting the revenue recovered using other mechanisms. Source: NRMMC (2010). As the ACT Government is a signatory to the National Water Initiative and the Initiative’s pricing principles, the Commission is required to ensure, to the extent possible, that Icon Water’s water tariff structure is consistent with both.