Final Report: Retail water prices –
an overview
FACT SHEET
The Queensland Competition Authority
monitors the prices, costs and revenues of five
water retailers in south east Queensland.
The Queensland Competition Authority (QCA) monitors
retailers to ensure that these businesses are not using
their monopoly power to set prices higher than is
necessary.
The QCA has released its final 2013–15 price monitoring
Seqwater
report for the five water retailers
south
east
owns andin
operates
the bulk
water system
Queensland (SEQ) – Unitywater, Queensland Urban
WaterWater
retailers
Utilities (QUU), Logan Water, Redland
and Gold
provides water and sewerage services
CoastUnitywater
Water.
Queensland
Logan
Redland
Urban Utilities
Water
Water
The QCA found no evidence of an exercise of monopoly
power, although, for reasons outlined below, we are
Customers
unable to establish whether Redland Water is exercising
its monopoly power.
These five water retailers are responsible for the
distribution and retail of water and sewerage services in
SEQ’s ten local government areas. These services include
distributing treated water to homes and businesses,
treating and disposing of sewage and other wastewater,
and issuing bills.
This fact sheet provides an overview of our findings.
More detailed fact sheets are available for each of the
five water
retailers. Submissions made in response to the
Gold Coast
Water
Draft Report
were taken into account and are available
on our website qca.org.au/water
residential and non-residential
Five water retailers of Seqwater
Noosa
Maroochy
Nambour
Caloundra
Bribie
Island
Kilcoy
Somerset
Somerset
Dam
Esk
Wivenhoe
Dam
Caboolture
Redcliffe
North
Pine Dam
Moreton
Island
Brisbane
Gatton
Lockyer
Cleveland
Ipswich
North
Stradbroke
Island
Logan City
Beaudesert
Boonah
Hinze
Dam
Surfers
Paradise
Coolangatta
Final Report: Retail water prices
Water and sewerage services in south east Queensland
Seqwater
owns and operates the bulk water system
OVERVIEW
Water retailers
provides water and sewerage services
Logan
Water
Redland
Water
Customers40
Increase in annual bill (%)
residential and non-residential
35
Residential Bills
Bulk water
30
Gold Coast
Redland
Logan
(ex Beaudesert)
Logan
Removal of council rebates
3
3
3
3
Esk
Wivenhoe
DamLogan
QUU
Unitywater
8
9
9
-3
-4
2
Gold Coast
3
2000
11
Redland
10
Logan
10
9
Redcliffe
Pine Rivers
Caboolture
Sunshine Coast
10
12
Somerset
Dam9
12
1800
Caboolture
1600
North
Pine Dam
1400
1200
Redcliffe
2026
1000
1983
800
600
400
Moreton
Island
1087 1025
913 895
415 391
200
Brisbane
0
Unitywater
Removal of council rebates
Bulk water
Island
2200
9
(ex Beaudesert)
8
9
Logan
8
Somerset
20
(ex Gold Coast)
8
Logan
10
Bribie
Costs for 2013–15
– Retailer vs QCA calculations ($m)
Kilcoy
Lockyer Valley
7
9
Scenic Rim
11
10
Ipswich
20
Somerset
25
-5
QUU
155 166
Logan
Redland
Retail and distribu on
Gatton
QUU
Unitywater
Redland
Enty Costs
Gold Coast
Lockyer
Gold Coast
North
Stradbroke
Island
QCA Costs
Cleveland
Logan
Note: QCA’s estimate of QUU’s costs increased by $2m (to $1983m) following
consideration of submissions on the QCA Draft Report.
Ipswich
Note: Chart shows drivers of change in residential bill from 2012–13, based on
200 kilolitres of water use per year. Source: SEQ water retailers.
12 2200
Logan
City
Revenues
above costs
(%)
2200
2000
1800
1600
2000
8 1800
4
1400
1600
9.3
1400
Beaudesert
0 1200
1200
2026 1983
Boonah
$M
$M
(ex Gold Coast)
Logan
million lowerUnitywater
across 2013–15,
due to a range
of factors
QUU
Logan
Caloundra
including lower
demand
forecasts
and
as
some
capital
Redland
Gold Coast
projects are due to be completed after 2013–15.
10
$M
35
1000
Logan
Scenic Rim
Lockyer Valley
Somerset
Pine Rivers
Redcliffe
QUU
Retail and distribu on
Brisbane
Increase in annual bill (%)
Caboolture
Unitywater
40
0
9
Maroochy
Costs – Findings
Nambour
The QCA believes that the retailers’ costs could be $134
Change in Residential Bills in 2013–14
5
10
Sunshine Coast
To help customers understand changing prices, water
retailers should explain the reasons for the change in
each part of the bill as well as the overall change.
10
25
Part of
15 our role is to establish whether the retailers’
9
9
11
10
8
20
2013–15
operating
and capital costs are required
10
12
10
10
10
12
(prudent)
and as low as possible (efficient).
8
9
9
9 Our
11
5
7
8
8
9
estimates
of prudent and
efficient
costs
then
determine
0
3
3
3
3
3
2
-3
-4
-5
the maximum
allowable
Noosa revenue (MAR) for the
business. The MAR is a key test for monopoly pricing.
If a business’s revenue significantly exceeds the MAR
for a sustained period, the business may be using its
monopoly power to obtain unjustified returns.
Only some of the change is due to the retailers, from a
fall of 4% in Redland to an increase of 11% in Logan (ex
Gold Coast). The remainder is due to bulk water charges
and the expiry of State and local government rebates.
15
10
30
Costs
20
In 2013–14, the total water and sewerage bill for
residents in SEQ will increase by between 5% and 39%.
Gold Coast
Water
Ipswich
Queensland
Urban Utilities
Brisbane
Unitywater
-4
-4.5
1000
-5.9
-5
2026 1983
Surfers-2.2
Paradise
-4.2
800
600
400
1087 1025
913 895
415 391
200
Final Report: Retail water prices
0
Unitywater
Enty Costs
Redland Water’s revenues for 2013–15, however, are
above our estimate of costs. This results from Redland
Water’s smoothing of prices over ten years. We have
concerns with the ten-year model and Redland Water’s
approach to pricing. Redland Water has advised that
it will take the QCA’s concerns into account in setting
2014–15 prices.
Revenues
above costs
(%)
Unitywater’s, QUU’s, Logan Water’s and Gold Coast
Water’s revenues are below the QCA’s estimate of
prudent and efficient costs in 2013–15. For these
retailers, we therefore found no evidence of an exercise
of monopoly power. This finding reassures customers
that these retailers are not using their market power
to recover more revenue than required to sustain their
business.
155 166
Logan
Redland
Gold Coast
QCA Costs
Over and under-recovery of costs for 2013–15
12
8
9.3
4
0
-4.5
-4
Revenues
below costs
(%)
Revenues – Findings
QUU
-5.9
-5
QUU
Logan
-2.2
-4.2
-8
-12
Unitywater
Redland
Gold
Coast
Total SEQ
Note: QUU under-recovery increased by 0.1% (to 5.9%) following consideration
of submissions on the QCA Draft Report.
More information
For more information on water and sewerage prices in your region visit our website: www.qca.org.au/water