"Treasury Update on Water and Sewerage Reform"
Tasmanian Water and Sewerage Reform A Better Community Solution Update on Water and Sewerage Reform Tasmanian Audit Office - Client Seminar 23 April 2009 Department of Treasury and Finance Primary Legislation Two pieces of Legislation brought the new structural and regulatory arrangements into effect. Water and Sewerage Corporations Act 2008 • Established three local government owned Regional Corporations and a fourth Common Services Corporation that will supply the water and sewerage services currently delivered by local government and bulk water authorities. • Provides for the transfer of employees, assets and liabilities to the new Corporations. Water and Sewerage Industry Act 2008 • Established a new regulatory framework for the sector, providing an independent economic regulator to supervise service standards and pricing. • Operational licensing of service providers to integrate the Corporations regulatory obligations. 2 The Structural Reform Model for the Future Delivery of Water and Sewerage Services The three regional Owner representation and companies and the Board memberships to common service provider provide a connection to the company will be owned by community and allow a Councils North-West Northern state-wide strategic view Region Region Company Company All current Bulk Water All companies have Common Authority and Council independent and Service Water and Sewerage expert boards Provider staff to transfer to a Company new companies on a no net detriment basis All companies are Southern Common Service accountable to the Region Provider will community through avoid duplication Parliament Company in the regional companies and All owner returns minimise costs to flow back to customers Councils 3 Structural Reform Key Remaining Issues • Preparation and finalisation of Transfer Orders • Regional corporations, CSC, State owned assets • Key steps and timing: • Negotiated resolution of Orders (30 April) • Legal review of Orders (May) • Arbitration process, if required (May) • Treasurer’s approval of Orders (15 June) • Gazette 1 July 2009 to meet agreed transfer date. • Treasurer’s Order for allocation of returns to councils. 4 Structural Reform Key Remaining Issues • Completion balance sheets: • determine actual net asset transfer values. • prepared by councils as at 30 June 2009 as part of financial statements preparation. • will assist councils to meet their disclosure requirements • KPMG engaged to prepare detailed instructions. • Starting point for Corporations’ revaluation work. 5 Regulatory Reform • Based on a well tried model appropriate for monopoly infrastructure services. • An independent Economic Regulator plays a central role in issuing licences, monitoring regulatory performance and in setting prices and service levels. • The Minister for Water has a co-ordinating policy role and is responsible for issuing an interim operating licence. • The Treasurer has the power to make interim price orders. 6 Regulatory Reform New New Economic Regulator Regulated Licence Entity Framework The general licence granted by the The powers and Regulator to a person who owns or functions, rights and responsibilities of operates water or sewerage Water and Sewerage persons under the Act infrastructure and provides water and sewerage services. Industry Act are specified by reference to regulated entities New Regulated Pricing Activity Framework New Performance • Customer Service Code Monitoring A regulated activity is an • Customer Contracts activity for which a person • Price and Service Plan • Annual performance reporting is required to hold a • Price Determination by Regulated Entities licence under the Act • State of the Industry Report • Audits 7 Regulatory Reform • Draft Interim Price Order (IPO) • Released for comment by the Treasurer on 15 April 2009. • Sets out the maximum allowable price increases for the new Water and Sewerage Corporations on a municipal basis. • Provides a balance between moving to full cost recovery and cushioning the impact on customers. • Price increases capped at 10 per cent per year, including inflation. 8 Regulatory Reform • Draft Interim Price Order (IPO) • Concessions for low-income earners and pensioners. • Provides sufficient revenue for Corporations to return a dividend to owner councils who earned a legitimate return on W&S activities. • Finalised following consideration of public submissions, 15 May 2009 9 Regulatory Reform Key Remaining Issues • Development of CSO policy and legislation development • Service standards regulations • Analysis of metering arrangements, including detailed cost benefit analysis and consultation program • Connections and extensions policy, including criteria for prioritisation • Pricing policy and legislation development 10 High Level Schedule Board Meetings 6 Mar 2 Apr 7 May 4 Jun ORCG Meetings 4 Mar 1 Apr 6 May 1 Jun Combined IJSC/ORCG Joint Readiness Meeting 13 May IJSC Meetings 29 Jan 17 Mar 23 Apr 16 Jun TBC Jul TBC Aug TBC Sep Structural Reform Transfer and Transition Plan finalised (Feb 09) Target Date for Full Transfer (1 July 09) Draft Transfer Orders issued (Feb 09) SLE finalised (Feb/Mar 09) Treasurer’s Order – allocation of returns to owners (Mar 09) Council Separation Plans complete (Mar 09) Interim funding arrangements finalised (April 09) Arbitration process for unresolved Transfer Orders (15 Apr – 30 May) Gazette finalised Transfer Orders (Jun 09) Treasurer’s Instructions finalised (Jun 09) Councils prepare completion balance sheet (Jun 09) Corporation’s establishment and implementation plan complete (Mar 09) Treasury allocation inputs report finalised (Jun 10) Operating model designed (Feb 09) Indicative final transfer asset values reported (Oct 09) Regional and CSC Organisational structures designed – including agreement on services delivered by CSC (Mar 09) Post implementation review (Oct 09) Corporation’s leadership teams in place (Apr Finalisation of transfer valuations 09) including distribution allocations (Oct 09 – Facilities plan complete (Apr 09) Jun 10) Finalise Service agreements between Corporations and councils (May 09 - TBC) Opening balance sheet completed (Jun 09) Corporate Plans complete (May 09 ) 1/ 1/ 3/ 4 2 4 J F M A M J J A S Regulatory Reform Interim Licences issued (Mar 09) Year 2 Interim Price Order (Dec 09 ) Consequential and Transitional Regulations (Mar 09) Pricing Regulations (Dec 09 ) Interim Pricing Order issued (Apr 09) Service Standards framework & general Customer Service Code issued (Dec 09 ) Industry Act regulations (Apr 09) State of the Industry Report released (Apr 09) CSO Tabled (Apr 09) Full Proclamation of Industry Act (Jul 09) Service Standards connections regulations (Jun 09) as at 3 October 2012