I believe it's already happening. Some weeks ago I heard an interview on ABC with some senior figure from Melbourne Water. On one hand, he said that Victorians had already paid for the infrastructure upgrades, the new pipeline, the desal plant, and were entitled to enjoy that now. On the other hand, he was quite sure that if people were to conserve more water, Melbourne Water would be able to recoup their costs; he was quite sure of the revenue side of things.
In the article you have pointed to, I don't understand how Kenneth Davidson arrives at his figures -- or anyone, for that matter. He is saying that 'before', the average household was paying $800 a year at 0.85 per kilolitre, and by 2012 they will be paying $2000 at $2.20 per kilolitre. Does that mean the average household consumes, in the first example, 2578 litres per day, and in the second one, 2490 litres per day? Given that we are pretty close to target 155 (litres per person per day), this means the average household consists of more than 16 people.
This is of course nonsense, I just want to point out I don't understand the arithmetic, there is something missing, namely how much does this calculation assume for sewerage costs, and for service charge for both water and sewerage.
For the past years we have been living in a rented unit with not even a separate water meter and no individual water bill, so I was quite surprised the other day when I got the first water bill at our new place. We have used only 16 kilolitres in 3 months; nevertheless, there are so many extra charges that our actual water usage constitutes only 15% of the total bill.
Obviously, independent of what they charge for actual use of water, they can set their 'service charge' to whatever they like and recoup their costs that way. Also, sewerage is not metered, those charges are always estimated. In our case, the service charge for sewerage alone makes up almost half of the bill. This could be because we have a rainwater tank which is connected up to flush the toilets, but I have never seen details of the tariff, or if there are other tariffs available for other setups.
The bill estimates that for 16 kilolitres of water used, we have produced 11.02 kilolitres of sewerage. I assume when water usage goes up, so will the (variable part of the) sewerage cost. But in actual fact, when a household which normally needs 1000 litres all of a sudden uses 1500, those extra 500 probably don't go down the drain. They have probably evaporated in the air conditioner or have been trickling away in the garden. This means, actual costs for treatment of sewerage don't go up when the water usage goes up in summer, another opportunity for revenue for the water companies.
If Holding said that the 'net present cost' per kl of water would be $1.37, then we are already pretty close, because we are already paying $1.23 per kilolitre. (Before addition of sewerage costs and the various service charges.)
Summary: I don't understand how an 'average price per kilolitre' or an 'average yearly bill' is estimated anyway, but sure there are numerous ways how the water companies can recoup their costs.
Posted Monday 31 May 2010 @ 12:48:07 pm from IP
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You're damn right, the fixed costs are the majority of most people's water bills. But obviously there's been some serious accounting done to decide on variable costs vs. fixed costs.
But that's why the government's added their rebate scheme, to add an incentive.