Rates hike to pay for water debt

By Geelong Story Updates
Barwon Water will borrow $290 million to guarantee supplies amid rising demand and forecasts of dwindling rain from climate change.
Customers will repay the debt and interest with a rates increase of about 75 per cent over the next five years.
Barwon Water revealed the price hike this week when it announced a $511 million plan to secure the region’s supply for the next 50 years.
Bigticket items in the plan included Barwon Water’s share of a pipeline from Melbourne, a recycling plant in Geelong’s northern suburbs and tapping into groundwater near Anglesea.
Barwon Water chairman Stephen Vaughan said the price hike would comprise 12 per cent increases plus inflation each year from 2008 to 2012.
Based on an existing inflation of about three per cent, average bills of $660 a year would rise around 75 per cent over the five years to about $1150.
But Mr Vaughan said Barwon Water would change its billing method for customers to peg back the hike with consumption savings.
The change would link bills closer to volume while introducing a fixed sewer charge, so customers who used less water would pay smaller rates.
“People who are proactive on water conservation can reduce the impact on themselves,” Mr Vaughan said.
He believed the proposed debt to pay for new infrastructure was financially responsible.
Mr Vaughan said the borrowing would leave Barwon Water with a debttoequity ratio of about 40 per cent. Ratios at some other water authorities were already around 45 per cent and would approach 60 per cent under their fiveyear plans, he said.
Mr Vaughan ruled out a new dam instead of the proposed infrastructure works.
“It (new dams) is not government policy,” he said.
Population growth projections and climate change predictions had guided Barwon Water’s choice of new infrastructure.
Mr Vaughan said Barwon Water had based the plan on a 20 per cent likelihood of a “moderate” effect on rain from climate change.
Barwon Water has released the plan for public comment until September 8 on www.barwonwater.vic.gov.au.