Sydney water price to rise during drought

Gus McCubbing
A new dual water-pricing system will see Sydney households pay more for water during droughts

A new dual water-pricing system will see Sydney households charged a separate and higher rate in times of drought.

From July 1 drought pricing will come into effect when dam levels fall below 60 per cent, and remain until they return to 70 per cent, the Independent Pricing and Regulatory Tribunal, IPART, announced on Tuesday.

The "average weather" usage price for water will sit at $2.30 per kilolitre but rise to $3.12 per kilolitre when dams are below 60 per cent.

Fixed water service charges, however, will be lowered irrespective of drought.

If customers do not reduce consumption, Sydney Water says an average annual household bill could increase by seven per cent amid drought.

But if Sydney customers saved water during restrictions, as they have by 11.4 per cent across the past year, they would reduce their bills.

The tribunal said a typical annual household water bill could fall by $80 from July 1 given greater Sydney's current dam capacity of 81.3 per cent.

The approach would encourage people to conserve water when the resource is scarce, Sydney Water general manager Maryanne Graham said.

"We have seen from the last period of drought that the community is willing to adjust the way they use and consume water during extended periods of dry weather to reduce the impact on our dam levels, and that is really encouraging," Ms Graham said in a statement.

Premier Gladys Berejiklian on Monday said NSW residents grasped the struggles many face amid drought, but wanted lower overall water prices.

"When there's lots of water around and we don't have to think as much about what we're using, prices are low, but when water is scarce that could be more price-sensitive," Ms Berejiklian told reporters.

"This is IPART's thinking ... I also want to stress the NSW government will keep working hard to keep water bills low."

Labor's Shadow Water Minister Clayton Barr called the proposal a "drought tax" and warned of price hikes.

"This proposal will hit people who can least afford it," Mr Barr said.

"Gladys Berejiklian must intervene to prevent families and renters from drowning in bills."

IPART on Tuesday recommended a total expenditure allowance of $10.1 billion over 2020-24, including $4.6 billion in capital expenditure.