Annual Report 2018-19

The way we regulate water pricing encourages better results for Victorian water customers.

In the water sector, we monitor business performance to ensure Victorians are getting high-quality water services at reasonable costs. We do this through a variety of channels, including customers surveys, a new water pricing framework that focuses on customer benefits, and a performance report that assesses how well water businesses are doing. 

Victorians have their say about water service

In 2018–19, Victoria’s 16 state-owned water businesses have been given a ‘solid pass with room to improve’ based on a survey of nearly 6,000 customers.

The quarterly surveys, conducted on behalf of the commission over the past year, tested customer views on whether water businesses are delivering value for money, their reputation, levels of community trust and overall satisfaction with their performance. 

On average, the businesses scored between 5.8 and 6.4 out of 10 across the four areas. 

Victorians receive good service from their water businesses

Our monitoring work involves producing our annual water performance report. In our latest report (which looks back on performance in 2017–18), we found that the typical Victorian residential water customer:

• received high quality drinking water
• used slightly more water than in 2016–17
• received slightly higher bills (a typical bill for owner occupiers increased by 2 per cent, reflecting inflation and the higher average water usage) 
• received consistent service levels
• received support if experiencing payment difficulties. 

Overall, we consider Victoria‘s 2.7 million customers continue to receive good service from their water businesses, as they have across the last five years.

Our water pricing framework puts customers first

Our water pricing framework has led water businesses to rein in prices and focus on service improvements. 

Under this framework, the majority of Victorian households benefited from flat or falling water prices after we set rates over the next five years for four of the state’s water businesses: East Gippsland Water, South East Water, Westernport Water and Yarra Valley Water. The estimated impact on average bills for customers of these businesses ranged from a $73 cut to an increase of $13 in 2018–19, not including inflation.

From 1 July 2018, we began using a new water pricing framework to review prices submitted to us by Victorian water businesses. The framework gives water businesses strong incentives to deliver better value for customers through built-in incentive mechanisms. 

In late 2018, we engaged FarrierSwier to undertake an independent review of the framework and how well it delivered on its objectives. The review found: 

• There is strong evidence the framework contributed significantly to delivering better outcomes for customers.
• The framework provided incentives for water businesses to deliver better value for money to customers, either through higher cost efficiency targets and lower prices, or better services.

The framework was successful in giving stronger emphasis to customer engagement, leading to price submissions that better reflected customer views.