Australian utility, Melbourne Water. has proposed extending the repayment period on loans taken out to construct out the 440 Ml/d Wonthaggi in Victoria in a bid to reduce bills.
The proposal is for A$18 billion (US$ 13.4 billion) in repayments currently due over 27 years to be spread out over 60 years to reduce the impact of the costs of the plant on water bills.
The plant, has never been used and costs about A$ 620 million (US$ 465 million) a year to keep operational which is paid for by water users through their bills.
Were desalinated water ever taken form the plant it would add
A$ 30 million-A$ 100 million ( US$ 22.5 million – US$ 74 million) a year to its costs
The proposed loan repayment extension would increase the overall borrowing cost to water users in the long term.
Melbourne Water said the Essential Services Commission had asked it to consider the option and it “would mean those who benefit from the desalination plant will contribute to its cost”.
Melbourne Water said it would need to borrow more money in the short term and customers would pay the additional interest, but the move would result in lower bills for customers now.
Consumer Action Law Centre chief executive, Gerard Brody, said it was fair that future generations contributed to the project cost instead of today’s households shouldering most of the burden. A joint submission by the Consumer Utilities Advocacy Centre, Consumer Action and Victorian Council of Social Service said: “It is efficient and equitable that the costs be spread across the customers who will benefit from the plant over its estimated 60-year life”.
Nationals leader and Coalition water spokesman Peter Walsh rejected the proposal: “Daniel Andrews is just lumping the massive cost of his desal white elephant from our children on to our children’s children,” he said.