In public access time at last week’s Council meeting (1 August) I told Byron Shire councillors that Hydrosphere’s cost calculations for connecting Mullum’s water to the Rous regional supply are seriously underestimated. Sadly, most councillors seemed indifferent.
Rous County Council have been increasing the price charged for water to their four council areas by 7 per cent per annum since 2020. They plan, according to their Long-Term Financial Plan 2024-34 (Table 12), to continue these 7 per cent annual increases until 2033, when they project that they’ll be able to reduce the annual increase to 2 per cent.
However, Byron Shire’s water supply consultant, Hydrosphere, based their economic analysis, in 2021, on the 2019/20 bulk water price of $1.72/kL and assumed there would be no increase in this price throughout the 2020-2050 period. Although inflation was low at the time, this seemed to be a risky assumption, which has now proven to be the case.
My preliminary calculations, using Hydrosphere’s demand estimates, show that the total operating cost of supplying Mullum with all of its water from Rous, from 2025 to 2050, would be $61.5m.
This calculation includes Rous’ rising price plans, and a saving of 60c per kL has been applied, as the mayor insists, to take account of reduced Council operating costs. This total could be discounted at 5 per cent per annum to give what economists call a net present value (NPV) in 2025 of $31.7m.
The $5m cost of the new supply pipeline needs to be added to these costs. These costs should be compared with Hydrosphere’s estimated total operating cost of $20.9m and NPV of $13.7m from Table 58 of their report.
I trust that the revised costs that the mayor has requested from his staff, for discussion on 15 August, will bear some resemblance to my calculations. Councillors can then seriously consider whether they still wish to abandon Lavertys Gap weir, in favour of continuously rising prices and everlasting bills from Rous, and against the wishes of 95 per cent of the local survey respondents in June.
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