A new water management plan that proposes eliminating fixed water charges may address the lacunae in the current system in Melbourne. Developed by former Victoria Chief Water Scientist Prof Peter Coombes, the Greater Melbourne Alternative Water Plan is supported by Kingspan Water & Energy, which calls on the Victorian Government to evaluate the impact of eliminating fixed charges for water, sewerage and stormwater services and rewarding those who are water efficient with a pricing structure that reflects their efforts.

Stuart Heldon from Kingspan observes that current water pricing mechanisms, where households pay a significant fixed ‘access’ fee, do nothing to encourage water efficiency and in effect, penalise the most careful water users.

“The plan set some radical benchmarks for water management in Melbourne, including an integrated approach to all urban water, performance targets for water use, stormwater and green infrastructure for all new buildings and setting better price signals for water use and stormwater runoff volumes,” says Heldon.

According to Heldon, one of the big challenges for water management is around pricing with fixed charges currently accounting for over 60% of the average household water service. The fixed charge is basically the access cost to households; the cost to households for the water that gets used is actually pretty low. Careful use of water doesn’t have a huge impact on the householder’s bill because the fixed access charges make up the lion’s share. Therefore, there’s little incentive for people to be more efficient in their water use.

“The structure of water charges directly affects how efficiently we use water, including our likelihood of using less water or seeking alternative water sources such as rainwater.”

Heldon says the impact of less efficient water management is huge.

“Greater demand for water means we will need more dams, desalination plants, treatment plants, pumps, pipes and sewerage treatment in the future. These are expensive assets to build and operate, and ultimately the cost will be passed onto the householder as higher water bills.”

Melbourne Water has recommended using the desalination plant to provide 100 billion extra litres of water next year – that’s equivalent to an extra 20% of Melbourne’s annual water use, and could also be a trigger for calls for another expensive desal plant.

“We don’t have to follow this path,” Heldon says. “We can change the way that we manage Melbourne’s water that will save money, help us maintain waterways, protect us against drought and stave off the need for another desalination plant. It’s completely achievable if the will is there.”

Coombes’ latest peer reviewed paper, to be presented at the International Hydrology and Water Resources Symposium in Melbourne[1], builds on the Nobel Prize winning economic theory, to predict that eliminating fixed water charges could result in lower water bills, make economic savings of $8.6 billion and save 187 billion litres of water each year by 2050.

[1] Coombes, P.J., Barry M.E., and Smit, M., (2018), Bottom up systems analysis of urban water resources and market mechanisms for pricing water and sewage services, HWRS2018, Engineers Australia, Melbourne