TasWater wants to push the risk of inflationary risks onto customers in future pricing plans, which Tasmania's treasurer and Treasury Department say will lead to more pressure on household budgets.
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The Tasmanian Economic Regulator is due to release a final version of the 2025-26 water and sewerage pricing plan by the end of the month.
This will be the fifth pricing plan since TasWater became a regulated body, and previous pricing plans have been developed over three and four-year periods.
TasWater has requested the new pricing plan have a five-year regulatory period, however unlike previous pricing plans, the annual price will be able to be reset to allow for inflation.
This would follow a similar process that the regulator applies to Aurora Energy's annual retail electricity prices.
TasWater has argued annual movements could result in an increase or decrease in prices, and that the five-year period would provide greater certainty for the business, customers and other stakeholders about prices to be charged.
The regulator in a draft report on the future pricing plan has said extending the regulatory period to five years could create risks if TasWater's costs diverge significantly from the forecasts used to establish prices.
It noted a number of significant changes were expected to be implemented by TasWater during the fifth regulatory period.
"Should adjustments need to be made in relation to any of these initiatives, noting the limited circumstances under which a determination can be re-opened, moving to a five-year regulatory period would mean that making these adjustments would be delayed by a year potentially adding additional costs for customers through higher prices," the regulator said.
State Treasury submitted to the regulator that TasWater's annual price adjustment proposal shifted inflationary risks from a monopoly essential service provider onto customers.
"Customers, particularly those already facing economic hardship, are not well-positioned to absorb and manage these risks," it said.
"Frequent price changes could create financial instability for households and businesses, making it difficult for them to budget and plan effectively.
"Introducing annual resets would likely lead to greater uncertainty and potential hardship.
Treasurer Michael Ferguson said under the current multi-year model, customers knew what to expect.
"Shifting financial risk from the utility to customers through annual price resets and inflation adjustments would likely result in more frequent price increases which could place an undue burden on households and businesses, particularly those already struggling with cost-of-living pressures," he said.
"Customers, particularly those already facing economic hardship, are not well-positioned to absorb and manage these risks."
Political reporter for Australian Community Media, based in Hobart.
Political reporter for Australian Community Media, based in Hobart.
