SA Water submitted its Regulatory Business Proposal 2016 (RBP 2016) to the Essential Services Commission of South Australia (ESCOSA) in August 2015.
ESCOSA reviewed this proposal and sought public feedback. It then released its Draft Determination in February 2016. After seeking feedback on the Draft Determination, ESCOSA released its Final Determination on 6 June 2016. The Final Determination sets SA Water's allowable revenue from customers for the next four years.
SA Water's RBP 2016 was based on our customers' views and expectations, and our business needs. It explained how SA Water proposed to operate and invest in infrastructure and services.
ESCOSA supported SA Water’s customer focus and its efficiencies to reduce prices. ESCOSA made further adjustments to SA Water’s proposed expenditure but overall ESCOSA’s determination is roughly in line with SA Water’s robust and efficient proposal. ESCOSA’s determination resulted in a 5.2% reduction in revenues compared with the revenue allowance for the first regulatory period. This will mean an $87 reduction in the combined water and sewerage bill for the average metropolitan residential customer in 2016-17. This outcome for customers is a direct result of SA Water’s hard work over the last 3 years to make its business more efficient and save money for customers.
The regulatory determination process enables an independent economic regulator to assess the revenue SA Water requires to provide reliable and efficient water and sewerage services to its customers.
The economic regulator, the Essential Services Commission of South Australia (ESCOSA) initiated this process for the second regulatory period (see below) in 2015. SA Water submitted our proposal in August 2015. This document was known as RBP 2016.
ESCOSA released RBP 2016 for consultation in September 2015 and made its Draft Determination based on RBP 2016, public submissions and its own independent, expert analysis. This was released on 10 February 2016. On 6 June 2016, ESCOSA made its Final Determination after publicly consulting on its Draft Determination.
RBP 2016 is SA Water’s proposal to ESCOSA as part of the process for setting the revenue SA Water can earn from customer prices. This process allows ESCOSA to review the prudence and efficiency of our proposed expenditure. It also determines how much revenue we may recover from our customers.
Our Customer Engagement Program is the first of its kind in both the breadth of customer engagement and the level of detail sought about the needs and expectations of our customers.
Between November 2013 and April 2015, we engaged with residents, businesses and industry groups across our customer base to inform our business strategy and next Regulatory Business Proposal for the period commencing 1 July 2016.
The Customer Engagement Program was delivered over five stages.
The reports of the Customer Engagement Program can be downloaded below.
The second regulatory period is four years and runs from 1 July 2016 to 30 June 2020.
Following a reduction in prices in our first regulatory determination (2013), we again recommended a decrease in both water and sewerage prices. These were proposed to drop in 2016-17, with increases to align with inflation in the three years after that.
We also proposed to continue our strong investment in water and sewerage infrastructure, and to maintain levels of service, including reliability, for our customers.
A digital strategy and investment in Information Technology also formed a large part of RBP 2016. These projects will enhance the customer experience. They will offer more channels of communication and accessibility to information.
We listened to our customers through our largest ever customer engagement initiative, Your Say, in 2014. You told us you want affordable prices, maintained levels of service and an improved customer experience. You asked for channels of communication and access to more information. Our proposal went through a robust development and review process and is now aligned with these customer requirements.
Our proposal for the second regulatory period was built on strong performance in the first regulatory period, in particular the efficiencies we achieved. These have resulted in lower costs to provide water and sewerage services. Overall, they will result in lower prices for our customers.
We proposed to invest $1.27 billion of capital over this four-year regulatory period. This included $675.4 million on water infrastructure, $479.7 million on sewerage infrastructure, and $115 million on Information Technology infrastructure.
Overall, our proposal results in a lower revenue requirement than the first regulatory period (the past three years). This decision was driven by efficiencies to reduce the required expenditure and a lower rate of return.
In 2014, we undertook our most extensive customer engagement initiative to date, Your Say. This helped us understand what you value about our services and where you want us to improve. The results from this report were included as part of our proposal.
We also consulted our industry regulators, who set the standards we are required to meet, to ensure our plans met their requirements.
After developing our plans for the second regulatory period, we continued to engage with customers and industry regulators to ensure they supported the direction we proposed to take. Customers told us they broadly supported our proposed direction over the 2016-20 regulatory period.
We are building on the efficiencies achieved in the first regulatory period and proposing further efficiencies to keep prices as low as possible. We will continue to invest where and when we need to over the second regulatory period and we will also drive further efficiencies across our capital delivery program.
Prices are set annually and it is not possible to provide the exact pricing impacts until after ESCOSA releases its Final Determination on total allowable revenue in June 2016.
We are building on the efficiencies achieved in the first regulatory period and have proposed further efficiencies to keep prices as low as possible. We will continue to invest over the second regulatory period and will drive further efficiencies across our capital delivery program.
Yes. ESCOSA has reviewed our proposal and consulted with customers and stakeholders. ESCOSA considered all feedback and released its Draft Determination for RBP 2016 on 10 February 2016 and again consulted on that. ESCOSA has now released its Final Determination which SA Water will implement from 1 July 2016.
ESCOSA released its Final Determination on 6 June 2016. The Final Determination generally found SA Water’s proposal to be prudent, efficient and aligned with customer expectations. It has determined:
SA Water will now implement the Final Determination with new prices effective 1 July 2016.
The Final Determination results in a combined bill reduction for the average metropolitan residential customer of $87 or 6.7%.
The new prices can be found here.
Over the next 4 years SA Water will be delivering on all its commitments made in RBP 2016 and allowed by ESCOSA in its Final Determination, specifically:
Below are the documents we have submitted to ESCOSA:
Regulatory Business Proposal 2016 - Full Version