Shadow Minister for Water Utilities, Chris Hartcher has condemned the Iemma Government for its dishonesty about how much money the desalination plant is going to cost Sydney consumers, especially when Dam levels are at nearly 70%.

“Not only is it disgraceful that Sydney Water was given permission to increase their prices by IPART recently but an analysis of the costs for the desalination plant have uncovered that there is still a $89.64 shortfall per ratepayer, to pay for the desalination plant”, said Chris Hartcher.

“A simple breakdown of the figures for the desalination project reveal the following:

Sydney Water has borrowed $1.9 billion for construction of the plant with interest repayments of $153 million per year, $55 million per year in contract repayments and $9.6 million in REC electricity payments (minimum) for the next 20 years. This gives a total of at least $6.25 billion to be repaid over the next 20 years.

In the Federal National Water Performance Report for 2006/07, Sydney Water has 1,595,000 residential customers and 126,000 non residential customers, totalling 1,721,000 customers.

For the $6.25 billion to be repaid, it will cost $313 million per year for the next 20 years. When divided by the 1.721 million Sydney Water customers it shows that each customer needs to pay $181.64 extra in water bills per year, for 20 years.

“Sydney Water has only been granted an increase of $92 per year, per customer, from IPART to pay for the desalination plant. Clearly there is going to be a dramatic increase in Sydney Water bills in the near future to repay this debt, even if the plant sits idle for the next 20 years”, said Chris Hartcher.

“These figures do not take into account Sydney Water’s own concerns raised in their submission to IPART that several factors may increase the debt, the interest repayments or ongoing costs for the desalination plant.

“Sydney Water last year identified the cost of the desal plant could rise above its $6.25 billion price tag with the following unpredictable problems – Insolvency risks, Interest rate rises, Electricity prices, Geotechnical conditions, Water quality, Volumetric risks, Risk of change in scope and Accounting risks. Recently the Managing Director of Sydney Water, Kerry Schott also identified the possibility of compensation to Australian Water Services who have a contract till 2022 to provide 80% of Sydney’s drinking water.

“It is time the Iemma Government and Sydney Water tell the truth about the exact cost of the desalination plant to Sydney Water customers. With the plant expected to provide up to 15% of Sydney’s water supply, whilst 8% of Sydney Water is lost in leakage, the desalination plant will only provide an extra 7% to Sydney’s water supply at an outrageous cost of $181.64 per customer minimum, per year, at least for 20 years. It’s disgraceful.

“This money would have gone a long way towards fixing the leaking pipes and saving more water than the desalination plant can provide”, said Chris Hartcher.