IAF and uniform delivery charges

IAF and uniform delivery charges

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We heard loud and clear the Infrastructure Access Fee (IAF) was too high.

“Why is the IAF so expensive? Investigate pricing structure options to help sustain our delivery system.”

We heard loud and clear the Infrastructure Access Fee (IAF) was too high. You also asked us to reduce this fee and to consider reallocating some of costs out of the IAF into other fees.

We looked at opportunities for cost reduction and reviewed how costs are allocated, to ensure they were still fit-for-purpose.  We explored many options for reallocating costs but most of these resulted in impacts on other customers that would not be reasonable.  

One change that was seen as appropriate was a reallocation of some overhead costs to service fees, just as overheads are applied to the other fees. This has slightly reduced overhead costs in the IAF and is one of the changes embedded in the new proposed pricing tables later in this document.

However, we believe the best way of reducing the cost of the IAF for all our customers is by cutting our operating costs by close to $20 million.  All our teams have significantly reduced operating costs to support fairer pricing. The work done on Shepparton costs has brought their costs much closer to the other districts.

In looking back at the structure and costings of our GMID irrigation districts, we also confirmed that the Broken Creek costs and revenues more correctly belong within the Shepparton Irrigation Area, rather than the Murray Valley Irrigation Area. This is because the vast majority of water supplied to Broken Creek customers uses Shepparton infrastructure.  So we are proposing to re-align the boundaries of those districts, to more accurately reflect their costs and revenues.

These two actions have reduced the cost differential between Shepparton and the other five irrigation areas to a point where it is no longer material. 

Therefore, we are proposing a move to uniform delivery charges in the GMID. This approach will:

  • Create a simpler pricing structure that will create cost efficiencies for GMW
  • Allow us to create more certainty and stable pricing across the region
  • Protect individual irrigation districts from price shocks caused by unexpected events
  • Strengthen the ‘one-GMID’ approach, to drive the best outcome for everyone.

You have told us that you want the IAF cost to drop. That you want delivery fees that are fairer for everyone. You told us everyone who receives the same service,should pay the same price, and we agree.

We strongly believe creating a unified GMID will do this. Creating a GMID that works together, puts our irrigators, our communities and our industries in the best possible place to tackle future competition and future challenges.

So now, while all our customers are getting reductions across the GMID, we believe the timing is right to deliver a uniform Infrastructure Access Fee and a uniform Infrastructure Use Fee.

We think it’s a fairer deal for all.

In real terms, uniform pricing will bring the Infrastructure Access Fee for the six districts to $2,527 per delivery share. This is a drop of almost $400 per delivery share from the current price of $2,925 for the five districts.

HAVE YOUR SAY: Do you agree with a move to uniform delivery charges for the six districts?

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