Efficiency incentives for Sydney Water

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Client Independent Pricing and Regulatory Tribunal (IPART)
Dates 2016
Service(s)Policy & Economics, Regulation & Competition, Review & Evaluation, Strategy & Finance

IPART commissioned CEPA to provide support on the setting of efficiency incentives for Sydney Water, for their price determination from 2016-20. Sydney Water had proposed amendments to the way that cost efficiencies are incentives in the regulatory framework, including the introduction of a mechanism to provide savings in a consistent way, irrespective of when in the price control a saving had been made.

CEPA reviewed the application of efficiency incentives in both the UK and Australia, using evidence on the performance of such mechanisms to guide the development of options for IPART to use. This included modelling of incentive strength and case studies of how a mechanism could be implemented. CEPA provided their final report to IPART in February 2016, with IPART noting recommending the CEPA proposed changes in March 2016.

The CEPA report can be found here.