Brief Project Description:

The major Australian water and energy utilities with natural monopoly assets are governed by a regulatory framework to ensure that they do not take advantage of the market to receive above market rates of return. The Water Corporation is setting up a systematic way of monitoring regulatory practice and tariff setting for other utilities for water, wastewater and drainage services.

This includes:

  • Reviewing rulings by economic regulators for utility tariffs, to understand how determinations are made, current industry practice and new developments.
  • For each utility, assess what framework they operate under for setting tariffs (e.g. are regulators or utility owners determining final prices) and the tariffs that are implemented, as well as the reasoning for setting and/or changing tariff structures.
  • Reviewing the economic cost of service models underpinning price determinations, including the weighted average cost of capital.
  • If there is time, scope may include reviewing third party access, developer charges and treatment of miscellaneous charges.

The outputs are expected to include preparing file notes for each utility and establishing a database to collate, review and monitor industry activity, including key reference documents. The research will develop a suitable framework for maintaining the database, and criteria for the suitability of inputs.

Regulators, utilities and key agencies in scope include:

  • Productivity Commission, Australia
  • Major Australian regulators and water utilities that are economically regulated
  • Australian Energy Regulator
  • Ofwat, UK
  • Major Western Australian energy utilities under economic regulation by the ERA (ATCO, Dampier Bunbury Pipeline and Western Power)

Additional regulators utilities and key agencies may be added to the scope