1B) Choice on the split of fixed versus variable charges – through a tariff structure

About this project

Our pricing structure means that generally customers will pay fixed and variable components of a bill - this includes fixed service charges for water and sewer services, as well as a variable charge for water consumption, based on a per-kilolitre cost. The fixed charges cover the cost of building, operating and maintaining our extensive infrastructure network.

Customers told us during engagement for our Price Submission that having more control over their bill was the highest area of concern. One of the ways we can do this is by changing our tariffs. Online surveys indicated a strong interest in revision of our tariff structure to reduce the fixed charges in favour of higher volumetric charges. This was also supported by customers at water cafes. Some of our customers feel they would benefit
financially from lower fixed water costs. However, lowering the fixed costs means increasing the water usage costs. The effect that this could have on customers differs depending on the household, therefore, there is a lot of consideration to be made before GVW decides to implement any changes to our tariffs.

Actions to date

We randomly invited 400 customers in Cobram and Kilmore to participate in the trial, which will see participants’ water rates change for the duration of the trial to a fixed service charge of $85.44 and a variable usage charge of $1.47 per kilolitre. We sent a commencement survey to the 26 customers who agreed to join the trial, to gather baseline data to understand water usage, water usage perceptions and their perception of Goulburn Valley Water. The trial began on July 1, 2019, with customers transitioned into the trial as part of the following bill cycle.

What's next?

Surveys will be carried out yearly to understand any impact of the changes in the tariffs and on water bills and water usage, and gauge customer satisfaction levels. Customers will receive two bills - one showing the amount under the trial, and one showing the account under standard pricing, so they can easily see any changes.

Our accountability for this project

Following the conclusion of the three-year trial and summary of customer experiences, a decision will be made by 30 June, 2022 as to whether to extend or vary the trial or to adopt a new tariff structure. In the event of not achieving the deadline we will make a Guaranteed Service Level payment of $5 to each of our residential customers.

For this information in PDF form, click here to download the factsheet (PDF: 222.2KB)