Water cost pain delay
Plan puts off desal repayment
VICTORIA’S multi-billiondollar desalination plant would take decades longer to pay off under a new repayment plan put forward by Melbourne Water.
The proposal would see $18 billion in repayments due over 27 years spread out over 60 years instead, initially reducing water bills by between $3.70 and $11 a year.
But the move would increase the overall cost to water users in the long term, because of Melbourne Water borrowing costs.
Melbourne Water says the Essential Services Commission asked it to consider the option and it “would mean those who benefit from the desalination plant will contribute to its cost”.
“Melbourne Water would need to borrow more money in the short term and customers would pay the additional interest, but it would result in lower bills for customers now,” it says.
The other option being considered is to retain the status quo.
The Wonthaggi plant, which has never been used, costs about $620 million a year to keep operational — which is paid for by water users through their bills.
If desal water was to be ordered, payments would increase by $30 million$100 million a year.
Consumer Action Law Centre chief executive Gerard Brody said it was fair that future generations contributed to the project cost instead of today’s households shouldering most of the burden.
A joint Consumer Utilities Advocacy Centre, Consumer Action and Victorian Council of Social Service submission on the plan says: “It is efficient and equitable that the costs be spread across the customers who will benefit from the plant over its estimated 60-year life”.
But Nationals Leader and Coalition water spokesman Peter Walsh slammed the plan.
“Daniel Andrews is just lumping the massive cost of his desal white elephant from our children on to our children’s children,” he said.
If $10 million a year in repayments were spread over a longer period, about $30 million would need to be recovered after the 27-year contract ends.