Pricing and developer charges
Best practice pricing for water supply, sewerage and trade waste provides appropriate pricing signals to enable customers to balance the benefits and costs of their use of water services and ensures efficient use of the services. It is required for effective and sustainable management of water supply and sewerage businesses and minimisation of customer bills. Best practice pricing is a key requirement of the National Water Initiative (NWI), 2004 the Council of Australian Governments' Strategic Framework for Water Reform, National Competition Policy and the NWI Pricing Principles, 2010.
DPI Water provides financial planning and pricing software, expert advice, training, user support and facilitates the use of these tools by local water utilities (LWUs) to achieve best practice pricing in accordance with the outcomes required by the NSW Best-Practice Management of Water Supply and Sewerage Guidelines (PDF, 1764.65 KB).
With water becoming an increasingly scarce resource both locally and globally, it is appropriate that LWUs focus on influencing water demand through increasing emphasis on usage based pricing. Best practice water supply pricing requires utilities to provide strong pricing signals to encourage efficient water use. The regional NSW local water utilities are now obtaining 72 per cent of residential revenue from water usage charges, which had halved residential water use to 166kL/a and enabled the NSW utilities to limit the real increase in the water supply typical residential bill (TRB) to 18% over the past 20 years - see the 2014-15 NSW Water supply and sewerage - Performance monitoring report (PDF, 4108 KB).
All of the regional NSW LWUs are now achieving full cost recovery for water supply and 98 per cent are achieving full cost recovery for sewerage, as required by the NSW Best-Practice Management of Water Supply and Sewerage Framework (PDF, 23.9 KB).
Best practice sewerage pricing involves a uniform annual sewerage bill for residential customers. For non-residential customers, an appropriate sewer usage charge is required for the estimated volume discharged to the sewerage system, together with an access charge based on the capacity requirements that their loads place on the system relative to residential customers.
Best practice liquid trade waste pricing involves commercial fees and charges to encourage cleaner production, efficient use of sewerage infrastructure and compliance with the conditions of approval issued to each trade waste discharger, in accordance with the Liquid Trade Waste Regulation Guidelines (PDF, 3350.77 KB).
For more information, or to discuss any aspect of pricing, contact an urban water officer.
Developer charges are up-front charges that a LWU can levy under section 64 of the Local Government Act 1993 to recover part of the infrastructure costs incurred in servicing new development or additions and changes to existing development.
Developer charges serve three related functions:
- they provide a source of funding for infrastructure required for new urban development;
- they provide signals regarding the cost of urban development and thus encourage less costly forms and areas of development; and
- are an integral part of the fair pricing of water related services
The 2016 Developer Charges Guidelines for Water Supply, Sewerage and Stormwater (PDF, 4362.04 KB) have been approved by the Minister for Lands and Water pursuant to section 306 (3)(C) of the Water Management Act 2000. These guidelines modify and supersede the Water Supply, Sewerage and Stormwater Developer Charges Guidelines, 2002 in accordance with the recommendations of the IPART Review Report and stakeholder feedback on a consultation draft of the new guidelines.
Unless a consultant had already been commissioned, preparation of all new Development Servicing Plan documents commenced after July 2016 must be in accordance with the 2016 guidelines. A Development Servicing Plan documents all the relevant information used to calculate the developer charges. The guidelines define requirements and provide guidance on preparation of a development servicing plan (DSP) document, analysis, audit, implementation and administration of appropriate developer charges to ensure that new development meets a fair share of the cost of service provision.
A key requirement of the 2016 guidelines is an independent audit of the DSP document.
LWUs with growth of fewer than five lots per annum are exempted from the requirement to prepare a DSP document.
For more information on developer charges please contact Mr Kandiah Mahadeva (Maha), Developer Charges and Water Security Coordinator on (02) 9842 8502 or email@example.com.