Victorian water businesses focus on being flexible to adapt to the challenges and opportunities ahead
10 March 2022
Senior leaders from 17 of the state’s water businesses met with the Essential Services Commission at our first industry roundtable for 2022.
A wide range of topics were discussed, with a particular focus on recovering from the pandemic and operating with new and emerging challenges such as the floods along Australia’s eastern seaboard, and the invasion of Ukraine.
We heard that the flooding in Queensland and New South Wales will likely disrupt local supply chains. We also heard about cost pressures in the construction and labour markets, and the ongoing population growth in many Victorian regions.
Commissioners heard that businesses are embedding new ways to support residential and small business customers, using learnings from the past two years.
Many businesses said that remaining flexible was important to ensure they are meeting the specific challenges of their regions.
Summary of Chairperson’s notes
Water customer service codes
Our focus remains on ensuring customers receive appropriate support during this period of ongoing uncertainty, including as the pandemic moves into a new phase.
In light of the latest easing of restrictions, we urge businesses to remain cautious with any changes to approaches for residential and small business customers experiencing vulnerability.
We are consulting on our water customer service codes, looking at how they might reflect the national coronavirus support principles in an ongoing way. We are looking to embed some aspects of these principles into our codes on an ongoing basis.
We’ve also sought to incorporate learnings from our current review of the implementation of the payment difficulty framework for the energy sector – which took effect in 2019. Our review is well underway, and we’ll share our findings with you later this year.
As many of you may know, this strategy is aimed at addressing consumers' experience of vulnerability. One of our objectives through the code review is to better reflect the voice of consumers within our work – a founding principle of the strategy.
An element of our engagement for the codes project is a deliberative process with customers which commences later this month, in addition to our consultation with your businesses.
Under Getting to fair, we’re also looking back at our work around support for customers experiencing family or domestic violence. Our work in this area was originally released for the water sector back in 2018 with our better practice guide.
We intended to complete more work in 2020. However, this work was put on hold when the coronavirus pandemic emerged.
We’ll be sharing some research we commissioned as part of the Getting to fair strategy with the water and energy sectors this year. We’ll also review current support for customers, with a view to update our better practice guide in 2023 for the energy, water and local government sectors.
2023 water price review
The 2023 water price review will become our main focus from October, with most of the team dedicated to assessing price submissions for 14 businesses. I wanted to touch on some key areas from our guidance.
I know the board attestation for your price submissions will be front of mind for you and your boards as we approach the September deadline.
In the 2018 price review, we saw a sharp increase in the quality of submissions after we introduced the attestation and board accountability as part of our PREMO framework, both in terms of the quality of information provided by businesses and the value proposals you submitted for your customers.
Our expectation is that each board will establish a suitable governance process, so they aren’t surprised by any content in the final price submission.
We’ve heard that you are facing competing cost pressures, but at the end of the day the Water Industry Regulatory Order requires us to focus on cost efficiency.
Many of you may be keeping an eye on rising inflation and expected interest rate rises. While interest rates may rise, projections are still below where we were at the 2018 price review, with current prices based on a five per cent borrowing assumption. Our assessment of pricing submissions will have a strong focus on real cost-efficient forecasts and value outcomes for your customers.
We encourage business’ regulatory teams to keep meeting with commission staff on any queries in the lead up to the submission of your pricing proposals.
