Document ID: chunk:federal_register_of_legislation:C2024C00557:clause:2_3
Version: federal_register_of_legislation:C2024C00557
Segment Type: clause
Provision Reference: sch 2 cl 3
Character Range: 1050701–1052076

3  Water storage and delivery
 (1) Pricing policies for water storage and delivery in rural systems are to be developed to facilitate efficient water use and trade in water entitlements.
 (2) Water charges are to include a consumption‑based component.
 (3) Water charges are to be based on full cost recovery for water services to ensure business viability and avoid monopoly rents, including recovery of environmental externalities where feasible and practical.
 (4) Water charges in the rural water sector are to continue to move towards upper bound pricing where practicable.
 (5) In subclause (4):
upper bound pricing means the level at which, to avoid monopoly rents, a water business should not recover more than:
 (a) the operational, maintenance and administrative costs, externalities, taxes or tax equivalent regimes; and
 (b) provision for the cost of asset consumption; and
 (c) provision for the cost of capital (calculated using a weighted average cost of capital).
 (6) If full cost recovery is unlikely to be achieved and a Community Service Obligation is deemed necessary:
 (a) the size of the subsidy is to be reported publicly; and
 (b) where practicable, subsidies or Community Service Obligations are to be reduced or eliminated.
 (7) Pricing policies should ensure consistency across sectors and jurisdictions where entitlements are able to be traded.