The refinancing of the Sydney Desalination plant will deliver $300 million in well-needed funds to NSW infrastructure.
But what does the future hold for Sydney Desal? Will it really be shut down as planned in July?
Not many people realise we are paying Sydney Desal more than $150M annually whether we get water from it or not. So instead of switching it off and continuing to pay for no water – let’s leave it on and get the water we have paid for.
This will make a difference in reducing draw downs on our precious drinking water reserves and deferring future costs required to upgrade the desal.
Sydney Water (NSW taxpayers) must continue to pay the new owners of Sydney Desal regardless of whether the plant produces water or not. Pre-sale, this ‘availability charge’ was set at $152M annually or $12.7M monthly - but is probably more now.
The availability charge includes electrical bills, council rates, depreciation, and is required to keep the plant “available” for potential future use.
If you are paying $152M whether the plant is producing water or not – why not get every last drop of water out of it that you can? Use the additional ‘pre-paid’ water to reduce draw down on our dams and improve environmental flows.
It was only a month or so ago that our dams and waterways were overflowing as a result of intense rain and floods. Now dam levels are falling again with total water storage at 94.8 per cent.
$152M pays for 91 Gigalitres of water per annum, or 4 per cent of Sydney’s total water storage.
There’s no doubt our water storage levels will continue to fall. By 70 per cent the Desal will be switched on again – but by 40 per cent what will happen? The Desal Plant will be upgraded to 500ML.
If we are to run out of water, what will the real cost be to create additional water infrastructure to make up that supply? How much will an expanded or new desal plant cost?
Why not defer these exorbitant costs by several years and use the ‘pre-paid’ 4 per cent water supply from Sydney Desal.
If the public sector doesn’t make use of this ‘free water’ – the private sector surely will!
If Sydney Desal and its new owners get themselves new customers, they will certainly sell water to them. Sure they’ll continue to make water ‘available’ to Sydney Water – but they will also be taking on new customers and utilizing SW’s new Third Party Access regime.
They will be making the water for $0.62 and selling it for less than the $2.10 we are all currently paying. They will also be offsetting drinking water that would otherwise been used by those customers.
So why aren’t we taking a leaf out of their book? Where is our water and why can’t we have it and use it – given it is already paid for?
It’s time we started the conversation about how we can better use our water assets for the best interests of the community.
Terry Leckie is one of Australia’s leading water industry experts and a passionate advocate of water reform, championing key changes to legislation and regulation.
Terry is also Founder and CEO of Water Factory Company, Australia’s first private water utility which is creating affordable and sustainable smart water networks. More of his blogs can be found at Water Spectator.