IPART have released a report by CEPA relating to efficiency carryover mechanisms (ECMs) alongside its Draft Report for the prices charged by Sydney Water Corporation from 2016-20. IPART has based its draft ECM decision on the recommendations set out in our report.
As part of the review process, Sydney Water had proposed amendments to the way that cost efficiencies are incentivised in the regulatory framework. In particular it proposed the introduction of mechanisms that provide for carrying forward the benefit of cost savings between regulatory periods. Our report considers the way these schemes have been applied in Australia and the UK, the issues associated with these and provides recommendations for the regulatory framework. Our recommendations took account of IPART’s statutory objectives, the existing and potential future overall regulatory framework and the particular characteristics of Sydney Water.
Our report can be found here.