We have approved the maximum prices Melbourne Water may charge from 1 July 2021.
Melbourne Water price review 2021
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Guidance paper released13 November 2019
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Additional guidance released18 August 2020
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Melbourne Water price submission9 November 2020
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Consultation closes5 February 2021
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Draft decision25 March 2021
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Consultation closes4 May 2021
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Final decision22 June 2021
Overview
We released our final decision on the maximum prices Melbourne Water may charge for its services from 1 July 2021 to 30 June 2026 on 22 June 2021.
This review is relevant to water customers living in and around the Melbourne metropolitan area
Melbourne Water provides wholesale water supply and sewage management services to retail water corporations that we also regulate. These retail water corporations are Greater Western Water (formerly City West Water and Western Water), South East Water, Yarra Valley Water, Barwon Water, South Gippsland Water and Westernport Water.
Melbourne Water also provides drainage and waterways services in and around Melbourne.
View our final decision and price determination
Following publication, we were advised of a clerical error in Melbourne Water’s determination (signed 21 June 2021) for the rate applying to the waterways and drainage charge - rate in $NAV (cents per annum). We have amended the determination to rectify this, and have done so without consultation given the corrected figure reflects the intention of our final decision, is consistent with Melbourne Water’s and the commission’s consultation on the charge, and the need to have new tariffs take effect on 1 July 2021.
You can also view our media release.
Key facts from our final decision
Prices will fall as a result of our final decision
Our final decision approved revenue of $7.9 billion over the five year period starting 1 July 2021. As a result, prices will fall adding to price reductions proposed by Melbourne Water. This translates to a average bill reduction of around $20 in 2021-22 year for a typical residential household.
Melburnians will continue to receive high quality drinking water
Melburnians will continue to receive high quality drinking water, safe treatment and disposal of sewage, and new investment in waterways and drainage. Melbourne Water will continue to reduce its environmental footprint and respond to climate change.
We approved Melbourne Water’s prices for the next five years
Melbourne Water proposes a five-year regulatory period starting 1 July 2021. Our final decision approves maximum prices for a five-year regulatory period.
Customer outcomes
As part of its price submission, Melbourne Water consulted with customers to develop six outcomes to guide service delivery during the 2021–2026 regulatory period. It also identified measures and targets that it will use to report on its performance against these outcomes.
Some of the ways Melbourne Water plans to address value for customers include:
- ensuring customers have access to safe and reliable water and sewerage services (largely through managing environmental risks and renewing older assets)
- maintaining the health of Melbourne’s river systems
- reducing flood risks
- making more green space available to customers.
Environmental outcomes
Our final decision accepts a number of Melbourne Water’s investment proposals that support the environment and respond to climate change, including:
- $4 million to meet its carbon offsets, pledges and reduction activities
- $43 million for waterway and drainage activities such as wetland maintenance and sediment disposal, vegetation for environment and amenity, and increasing land and water access for the community
- investment in and maintenance of the Eastern Treatment Plant solar generation plant.
Consultation on our draft decision
We invited feedback from stakeholders on our draft decision via Engage Victoria before we made a final decision and price determination. Our consultation ended on 4 May 2021. You can read our public engagement summary for more details.
Our virtual public forum
We held a virtual public forum on 22 April 2021. The forum provided an opportunity for interested stakeholders to discuss key features of our draft decision. See a recording of the forum below:
Feedback on our draft decision
We sought feedback on our draft decision on Melbourne Water's 2021 price submission via Engage Victoria. We received 10 submissions including from the general public, VicWater, Yarra Riverkeeper Association, Consumer Action Law Centre, Newgate Research, Urban Development Institute of Australia - Victoria, a joint submission between six Victorian water businesses and a response to our draft decision from Melbourne Water.
Submissions covered topics including:
- affordability and the impact of the coronavirus pandemic
- environmental impacts and outcomes
- PREMO rating
- willingness to pay
- capitalisation of desalination security payments
- demand forecasts.
Details about feedback that informed the draft decision are available in the resources tab on this page.
How we reviewed Melbourne Water's prices
We undertook this review under our PREMO water pricing approach, which includes new incentives for water businesses to deliver outcomes most valued by customers. We reviewed the price submission against the Water Industry Regulatory Order (2014), the Essential Services Commission Act 2001, and the guidance we provided to Melbourne Water in November 2019 and August 2020.
As part of the water price review process, Melbourne Water can send us submissions on its proposed prices and key outcomes. Once we make a determination on these proposals, we create an annual tariff schedule for Melbourne Water. The schedule outlines the maximum prices Melbourne Water can charge its retailers for specific services, such as water delivery and sewage processing and the maximum prices it can charge consumers of waterways and drainage services.
Learn more about water price regulation
Read about how water bills are calculated and how we regulate the water sector.
Resources
Feedback on our draft decision
Submissions to our draft decision
Melbourne Water's 2021 price submission
Accessible word versions
Submissions to Melbourne Water's price submission
We sought feedback on Melbourne Water’s 2021 price submission from December 2020 to 5 February 2021 via Engage Victoria. We received seven submissions from the general public, and four from organisations: Hume City Council, Yarra Riverkeeper Association, Friends of Steele Creek and Werribee River Association.
Submissions from the general public covered topics including:
- affordability
- proposed pricing for sewerage service
- lack of incentives for water savings
- waterways and drainage charges.
A submission from the Hume City Council:
- expressed support for increased protection of natural wetlands
- requested to investigate the timing for the construction of end-of-line stormwater quality treatment assets
- expressed support for the Sunbury and Upper Merri Creek stormwater harvesting infrastructure.
A submission from the Yarra Riverkeeper Association:
- expressed support for the waterways and drainage charges proposal
- commented on customers desire for healthy biodiverse waterways as a result of coronavirus
- commented on Melbourne Water’s engagement and its regulatory obligations for waterways’ environmental health.
A submission from Friends of Steele Creek:
- expressed support for the increased waterways and drainage charges
- commented on the relevance and consideration of the consultation process and findings.
A submission from the Werribee Riverkeeper Association:
- expressed support for the increased waterways and drainage charges
- commented on challenges for the waterways including endangered species
- commented on increased use of the waterways due to the coronavirus pandemic.
Guidance paper
In addition to our 2019 guidance, we updated our guidance in 2020 to ensure the effects of coronavirus pandemic are reflected in Melbourne Water's 2021 price submission