WA's economic regulator has recommended average household water bills should fall almost $130 next year in a report that could put a big hole in the State Government's finances.
The Economic Regulation Authority yesterday defied years of hefty water price rises to suggest most people were paying enough for supplies and should now pay significantly less.
Releasing its long-awaited draft inquiry into WA water tariffs, the ERA put forward a raft of changes that would see a typical residential water bill fall 10.5 per cent, or $128 a year.
Central to the authority's report was that the Water Corporation - the State's biggest water provider - should not be able to return such a healthy profit to government.
But the authority also said the method used to calculate a property's annual wastewater charge should be overhauled - a move it said would save 80 per cent of households $148 a year.
This fall would be offset by a modest 3.6 per cent or $20 increase in water usage charges.
But the overall effect of the changes would leave average customers $128 a year better off, with country residents getting a similar windfall. Some households would be hit with higher wastewater charges but the ERA said these should be capped at $50 a year over the next three years.
Annual tariffs would only need to rise in line with inflation in the following two years, the authority said.
ERA chairman Lyndon Rowe said wastewater charges - which made up about 50 per cent of a household's annual water bill - were unfair because they were based on the value of a property rather than the cost of servicing it.
"Think of elderly people who have lived in the same home in Victoria Park for 20 or 30 years," Mr Rowe said. "House prices have increased significantly but their incomes haven't changed."
Though the draft report's recommendations will be welcomed by water consumers, they threaten to wipe hundreds of millions of dollars from Treasury coffers over the next three years.
The ERA said if the report was implemented, the corporation would end up receiving more in taxpayer subsidies to service unviable country areas than it returned to government in profit.
Water Minister Bill Marmion noted the ERA was only making recommendations and the Government would determine changes to water tariffs as part of the Budget.
Shadow water minister Fran Logan opposed scrapping the wastewater calculation rules, saying the move would disproportionately hit poor people in low-value homes.