SA Water to continue working with ESCOSA on future business plans

The Essential Services Commission of South Australia’s (ESCOSA) draft determination for the 2020-24 regulatory business period demonstrates SA Water and the Commission are aligned on priorities like the need for a customer price reduction, financial building block basics, a range of capital investment initiatives, and many of the service commitments SA Water makes to its customers.

However, after reviewing the Commission’s draft SA Water said additional work is required over coming weeks to bridge identified information gaps and achieve better balance in the final determination.

SA Water will seek to better understand the Commission’s preferred methodology for estimating the costs of servicing debt, explore the reasoning behind the exclusion of some service improvement initiatives, and test the assumptions behind operating expenditure allowances.

SA Water General Manager Customer Delivery Kerry Rowlands said both SA Water and the Commission had put forward proposals that would see reductions to customer bills and agreed this as a shared priority.

“We’ve heard loud and clear that our customers want low and stable prices, with a real price reduction, and we need to make sure that outcome is achieved without impacting service levels or resulting in under investment that creates operational problems and a cost burden in a few years’ time,” Kerry said.

“We always strive for efficiency – and have made good grounds in this space over recent years – so we’re keen to pursue all realistic improvement opportunities.”

Over coming weeks SA Water will conduct a thorough review of the draft determination and submit a formal response to ESCOSA, with public submissions open until 15 April 2020, ahead of a final determination being released in May.

Mrs Rowlands acknowledged SA Water would take learnings from this process around the preparation of some business cases.

“Business cases for recycled water initiatives are never commercially strong because of the type of technology involved, although our customers overwhelmingly tell us they want to see more of it, and perhaps this sentiment was not adequately conveyed in our proposal,” Kerry said.

“We also need to understand if we could have better communicated the proposed regional and remote water quality improvement programs that were not included in the draft determination – while a metropolitan one was – despite our customers confirming a clear sense of equity and fairness, and specific support for these initiatives.

“Another decision we will need to understand is the exclusion of solar generation and storage infrastructure associated with our Zero Cost Energy Future program, which was explicitly designed to lower our operational costs for the benefit of customers.

“ESCOSA have previously recognised Zero Cost Energy Future is a good initiative, and the financial and environmental benefits remain strong and clear, so we’ll confidently continue with this project.”

SA Water’s comprehensive 287 page ‘Our Plan 2020-24’ was submitted to ESCOSA in November 2019 and outlined how it proposed to deliver reliable water and sewerage essentials and implement sustainable service improvement initiatives to benefit customers, while delivering a modest price reduction. Our Plan is available to view at sawater.com.au.

Our Plan was informed by SA Water’s most extensive customer engagement program to date, which heard from more than 12,000 customers through a range of mechanisms and was assessed by ESCOSA’s independent expert consultant as aligning with best practice in the modern Australian utility sector.

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