The Queensland Government has announced changes to the South-East Queensland Water (Distribution and Retail Restructuring) Act 2009.


The Government repealed legislation that tied councils to the three water utilities, and will allow council’s to be solely responsible for the price of water charged to the rate payers.


The changes will cap distribution and retail annual water and sewerage price increases at CPI, which currently stands at 2.7%.


Under the present arrangements, the three water companies - Queensland Urban Utilities, Allconnex and Unity Water - operate independently under council-appointed boards.


The local governments have until July 1 to determine if they will stay with the water companies or create their own water supply business.


Queensland Premier Anna Bligh said the State Government would continue to produce and treat the bulk water that is delivered to the water utilities.


“We will also continue to operate the water grid that shares water across the SEQ region and gives water security to all its citizens,” she said.


“What this announcement means is that SEQ Councils will be responsible for how water is distributed and retailed and how much they charge. These decisions will rest solely with councils.


“It will be open to SEQ councils to opt out of their utility company and operate distribution and retail as a business unit of their council and set the price that way.


“Equally it will be open to councils to opt to retain the utilities in their current form with the councils still holding absolute power to set the price of water bills.


“I hope it means that the dishonesty and confusion that is being peddled to people in the South East will stop once and for all.”


The Premier said the Government accepted that councils have many matters impacting ratepayers to take into consideration accepted it may take time for them to adapt to the new arrangements.


“But ratepayers are entitled to water pricing certainty during this period, and for this reason the Government will legislate to limit the annual increases in water and sewage costs to CPI, which currently stands at 2.7%,” she said.


The councils' peak body reacted angrily to the "one-page policy" announcing the utilities about-face and the cap on water prices. It blamed bulk water prices for the escalating costs that home owners have faced.


Local Government Association of Queensland executive director Greg Hallam said: "The government is looking for a political bandaid to fix the issue but they haven't addressed the fundamental issue: the price of bulk water. The whole water grid was created in a panic and now we have got yet another panic."


Mr Hallam said the Bligh government had ignored the association's plan to merge the three companies into one supplier, which he said could save each ratepayer $80 to $100 a year.


He said the transaction costs to create the three utilities were up to $300m, including legal, financial and consulting fees.


The Mayor of Moreton Bay, Allan Sutherland, said the policy was "a political stunt because we are in an election year".


"It's a knee-jerk reaction to Campbell Newman's announcement (that he was running for parliament)," Mr Sutherland said. "There is no doubt about that whatsoever."