Cost drivers for wholesale sewerage services and cost impacts of recycled water plants

This report is focused on identifying the potential cost impacts, for both the upstream and downstream networks of the wholesale service provider (i.e., Sydney Water or Hunter Water) resulting from the operation of a recycled water plant. We note IPART’s wholesale pricing framework provides for a retail-minus pricing approach and consideration of facilitation costs. The purpose of this report is to advise on how these potential cost impacts are to be calculated not how they are reflected in the wholesale price methodology.
In considering these cost impacts, the focus is on the direct, financial cost impacts for the upstream and/or downstream networks of the wholesale service provider (i.e., Sydney Water or Hunter Water). In undertaking this work, we have based our analysis of the impacts of recycled water plants on the wastewater treatment plants that are currently operating in Sydney Water’s or Hunter Water’s areas of operation, or likely to be operating in the near future.
We note that there are likely to be broader, public benefits (as identified in submissions from City of Sydney, Lendlease and Flow Systems) as a result of the introduction of recycled water plants. These broader public benefits include factors such as enhanced greening, urban cooling and livability for communities – currently, these are all quite difficult to quantify. However, this is outside the scope of this project as these impacts do not affect Sydney Water’s and Hunter Water’s costs, rather they impact on the broader society.

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