In setting water delivery fees for the 2023/24 season, the CPC Board has reviewed the Company’s performance for the 2022/2023 financial year and taken into consideration several factors influencing its operations and its shareholders’ interests.
The key issues in setting prices for the coming year are: -
Power Pricing Impact on Water Delivery Costs.
CPC’s current power supply contract runs to 31/12/24. The contracted annual rates slightly increase in the last year of our contract period. From January 2025, the CPC price will be exposed to market power prices that will likely be considerably higher than current contacted prices. To manage the impact of power price increases, CPC is currently in the final stages of considering the construction of a 2MW solar farm near the Jervois pump station to help offset the large power costs by using renewable energy. Further updates will be provided to shareholders in coming months.
Asset Replacement Fund.
CPC’s infrastructure, whilst still relatively early in its useful life, is starting to show the impact of constant operational activity. There remains a need to ensure CPC accumulates sufficient funds for asset replacement in the future, which is crucial to the system’s longevity and continued ability to operate efficiently and cost effectively to meet shareholder needs.
An independent report by consulting engineers IPMG has indicated CPC should currently aim to set aside $300,000 annually from retained earnings to provide a fund for future asset replacements and refurbishments.
During the past year we have experienced a significant flood event and with that came poor water quality. Extensive works were done at PS1 to protect the site from rising flood water. Water quality and pressure issues caused PS2 main pumps to suffer continuous leaking seals requiring several rebuilds during the irrigation season. The availability of funds in the Asset Replacement Fund ensured these matters could be funded without a call for shareholder support.
Taking all relevant factors into consideration and continuing cost inflation pressures, the CPC Board has decided to raise the water delivery pricing by $15/ML from the current year. It should be noted that this is the first rise in water delivery fees since 2017-2018 season.
The 2023/24 fees are set out in the following table together with graphs showing historical water delivery fees since 2012.
