Authority cracks down on GAWB's confidentiality claims
INFORMATION initially redacted in a report about future pricing for Gladstone Area Water Board's industrial customers has been forcibly released by the Queensland Competition Authority.
After a formal assessment, the authority determined information about the proposed costs to pass on to customers should not have been kept confidential in the price monitoring report for 2020-25.
In its initial proposal GAWB said it wanted to pass under-recovery revenue costs - totalling $124.7 million - onto customers, but did not reveal what impact it would have on prices.
It said customers would be made aware of how the additional under-recovery costs would affect their charges by July 2020, ahead of the next price monitoring period from 2020-25.
In response Wiggins Island Coal Export Terminal, CS Energy and Callide Power Station raised concerns about the proposal.
This week QCA released a new version of GAWB's report, publishing originally redacted information.
It also invited customers to apply for information about individual amounts via the QCA.
GAWB chief executive Darren Barlow said it was committed to working with its customers and the community to deliver fair and reasonable prices.
"Given our pricing for the next five years is not yet finalised, GAWB felt it would be misleading to publicly release information - which may be subject to change - prior to the QCA completing its investigation," Mr Barlow said.
Mr Barlow said GAWB directly engaged with each customer as part of the pricing report process and gave them an opportunity to confidentially review information.
"Customer engagement is a process that will continue until the pricing investigation concludes," he said.
"We continue to encourage all stakeholders to be part of the QCA's ongoing consultation process."
In its initial report, the water board calculated prices were expected to be on average six per cent lower between 2020-25.
But major industry customers said any benefit from the price reduction would be lost once GAWB added charges under its proposed under-recovery scheme.
In the report GAWB said it would send a letter to affected customers in July 2020, outlining the changes.
In its submission, WICET said the changes and what they meant for business were "unclear".
"WICET submits that the full impact on customers should be known and quantified before any $/ML price increases are finalised," it said.
It also raised concern for a potential blowout to capital expenditure costs during the next pricing period from 2020-25.
GAWB's capital expenditure between 2016-20 was about $122.48 million, which was $20.95 million over forecast.
"GAWB is then forecasting capital expenditure of $178.5 million for the 2021-25 period … If a similar cost overrun is expected … then this forecast number would increase to approximately $216.29 million, almost double the spend for the previous period," it said.
"In circumstances where GAWB funds its operating expenditure and capital expenditure through the prices that it charges to customers, and is proposing that it be entitled to charge under recoveries from previous periods to customers, there is no incentive for GAWB to ensure that its expenditure remains within forecast and further, no incentive for it to bring costs in under forecast."
CS Energy, which provided comments on behalf of Callide B Power Station, said GAWB did not provide sufficient information to allow the company to make a "fully informed decision" on if the prices were reasonable.
It said the potential impact of GAWB charging existing customers for the under-recovery could result in an 11 per cent increase over five years or six per cent over 10 years.
In a separate submission, Callide Power Station raised concerns about the proposed under-recovery scheme.
"It sends a signal that GAWB does not have a good understanding of its operating costs if it is constantly under- recovering its revenue," it said.
"While at face value, a real price decrease is a 'good' result for industry, CPM is seeking to ensure the QCA scrutinise and validate the key changes in approach and methodology used in GAWB's submission," it said.
QCA's draft report is due in February next year and a final report in May.