Essential Services Commission of South Australia

In reply to Mr COWDREY (Colton) (20 June 2024). (Estimates Committee B)

The Hon. S.C. MULLIGHAN (Lee—Treasurer, Minister for Defence and Space Industries):

In relation to question 1, I advise of the following interactions with ESCOSA relating to the setting of the regulated asset base (RAB).

On 24 January 2024, ESCOSA published its draft regulatory determination to apply to SA Water for the four-year period 1 July 2024 to 30 June 2028. The draft regulatory determination included positions in relation to the values for the RAB for water and sewerage retail services for each year of the 2024 regulatory period. The draft of the regulatory determination can be found on ESCOSA's website at https://www.escosa.sa.gov.au/projects-and-publications/projects/water/sa-water-regulatory-determination-2024.

The pricing order, which I issued in February 2024, specifies how ESCOSA's regulatory determination is to be prepared and presented. In particular, that pricing order states that the RAB is to be rolled forward consistently with Principle 5 of the National Water Initiative (NWI) Principles for the Recovery of Capital Expenditure. All pricing orders that have been issued under the Water Industry Act 2012 are available at: https://www.treasury.sa.gov.au/economy,-taxes-and-rebates/economic-regulation.

Section 6 directions were issued by the Minister for Housing Infrastructure under the Public Corporations Act 1993 in June 2024. Section 6 directions include reference to capital expenditure for the regulatory determination period commencing 1 July 2024. Capital expenditure is a component of the RAB roll forward methodology.

On 25 June 2024, ESCOSA published its final regulatory determination to apply to SA Water for the four-year period 1 July 2024 to 30 June 2028. The final regulatory determination included positions in relation to the values for the RAB for water and sewerage retail services for each year of the 2024 regulatory period.

By way of background, chapters 12 and 16 of ESCOSA's statement of reasons for the regulatory determination to apply to SA Water for the period 1 July 2024 to 30 June 2028 provides further details regarding RAB values (for example, see pages 294-299, 348-349). The final regulatory determination can be found on ESCOSA's website at https://www.escosa.sa.gov.au/projects-and-publications/projects/water/sa-water-regulatory-determination-2024.

In relation to question 2, I advise that, as part of ESCOSA's regulatory determination to apply to SA Water, ESCOSA determined the RAB values for the period 1 July 2024 to 30 June 2028.

By way of background, the values of the RAB commencing 1 July 2024 have been set by ESCOSA in conformance with the statutory requirements and set out outlined in its statement of reasons. The opening values of the RAB, as at 1 July 2024 and presented in December 2022 dollars, are: $9,619 million for water retail services, and $4,882 million for sewerage retail services (refer to table 12.4). Chapter 16 of ESCOSA's statement of reasons for the SA Water regulatory determination 2024 presents the RAB for each year of the regulatory period (refer to table 16.3).