The Australian Competition and Consumer Commission has released pricing principles for price approvals and determinations made under the Water Charge (Infrastructure) Rules (WCIR).

 

The WCIR provide for price approvals and determinations of certain rural water infrastructure operators in the Murray-Darling Basin by either the ACCC, or a state agency accredited by the ACCC. These price approvals and determinations will apply to charges for many non-urban water services provided by State Water, Goulburn-Murray Water and Lower Murray Water. Other operators may be conditionally covered by the WCIR.

 

The principles outline the ACCC’s approach to making price approvals and determinations under the WCIR. The ACCC is proposing that, as a term and condition of accreditation, state agencies will also be required to apply the principles.

 

The principles mainly relate to the determination of the costs on which regulated charges are to be based, as well as how revenue should be determined and, ultimately, how charges are levied to recover this revenue. For instance, principles relate to the approach a regulator should use to assess operating and capital expenditure proposed by an operator, the determination of the rate of return to be applied to assets, and the principles to be applied when assessing what tariff structures should be applied to regulated charges.

 

The principles have been formulated to achieve a basic level of regulatory certainty and consistency in approach, while providing regulators with an appropriate level of discretion to address pricing issues as they arise.


It is likely that the principles will require revision from time to time to reflect changes in market conditions or new regulatory approaches. For this reason, the ACCC will retain the discretion to amend the pricing principles if necessary. In making any substantive changes to the principles, the ACCC will seek the views of stakeholders, including regulated businesses and relevant state regulators. The ACCC will comprehensively review all pricing principles after 1 July 2014.

 

The full document can be found here.