To set fair and sustainable charges, we first need to understand the cost of providing water and wastewater services, now and into the future.
Some costs are part of our day-to-day operations. These include things like paying staff, running treatment plants, and covering costs such as electricity and chlorine.
Other costs are longer-term investments. These include building new infrastructure, upgrading treatment plants, and replacing ageing pipes and other assets. While we receive some funding through development contributions, most of the money needed to operate, maintain and improve our services comes from either customer charges or borrowing.
Because water infrastructure is expensive to build and maintain, investment in assets is one of the biggest factors influencing prices. While borrowing can help spread costs over time, that money still needs to be repaid. Ultimately, customer charges are the main source of funding for the services we provide.
When setting prices, there are some important trade-offs to consider:
- Lower charges today may require more borrowing or less infrastructure improvements and upgrades.
- Lower borrowing today may require delayed or reduced infrastructure improvements and upgrades.
- Higher investment in infrastructure today may increase charges, require more borrowing, or both.
The key question is finding the right balance between affordability today and maintaining reliable services for the future.
Once we understand our costs, we can decide how to recover those costs fairly. For example, we need to consider how much should be collected through fixed charges and how much should be based on water use. We also need to think about the different needs of residential, commercial, and trade waste customers.
Every pricing decision affects customers differently. That’s why it’s important we understand how people use our services, consider the needs of different customer groups, and balance fairness, affordability and long-term sustainability.