How Regulators Could Kill Off Australia's Water Recycling Industry

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How Regulators Could Kill Off Australia's Water Recycling Industry

A world-leading system in Sydney’s Central Park precinct helps residents reuse up to 97% of their water. But a pricing change threatens future schemes.

By Michael Slezak

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Sydney, Image source: Wikimedia Commons, Author: Matthew Field

In the basement of a Sydney housing development is the world’s largest water recycling plant in a residential building.

Normal apartments put more than 90% of the water they consume back into the sewer. But thanks to the recycling plant, units in Central Park, built on the site of the old Carlton brewery close to the CBD, return just 3%.

According to councils and water experts, such plants will be essential as Sydney’s population grows – making sure that precious water resources are used sustainably, and that the city is resilient to drought, storms, and even terrorist attacks.

The recycled water from the plant, which serves Central Park’s more than 2,000 units, is clean enough to drink. But with community sentiment not quite ready for consumption of water recycled from sewage, drinking water is bought from Sydney Water, to top up the recycled water used for most other things.

As a result of the Central Park project – as well as others including those at Green Park and Barangaroo – Australia is quickly becoming a world-leader in water recycling.

“If the Ipart determination is allowed to proceed in its current form, the recycled water market in urban areas is likely to be decimated,” a coalition of developers, councils, environmentalists, academics and building certifiers said in a letter to NSW premier, Gladys Berejiklian in May this year.

But according to the industry, academic water researchers, environmentalists, Sydney city council and others, a technical decision by NSW pricing regulator Ipart (the independent pricing and regulatory tribunal) has the potential to kill the burgeoning industry overnight.

Terry Leckie is founder of Flow Systems, the company behind the recycling plant at Central Park and a dozen other communities in NSW. He is even more blunt about the impact of the decision. “Overnight they have shut down the water recycling industry,” he says.

In a decision made final in July, Ipart ruled that recyclers would no longer receive wholesale rates (technically called “non-residential” rates) from Sydney Water for their fresh water and sewage access. Instead they will be subject to a “retail minus” pricing structure.

Under such a scheme, the pricing of water for the recycler would be set so that the incumbent – in this case Sydney Water or Hunter Water – has its profits maintained. So whether they are serving a resident behind a water recycling plant, or a resident in any other apartment, regulations will ensure Sydney Water make the same profit from that customer.

As a result, the recycler will get charged the normal retail rate for every customer they have, minus an estimate of the savings they are providing for Sydney Water.

Existing schemes won’t be automatically thrown on to the new pricing structure, but can be at the request of Sydney Water.

Ipart estimates the cost to recyclers will increase up to fourfold. But according to Flow Systems, the company behind the recycling plant at Central Park, that change could mean they end up paying more than 10 times for the services.

Read full article: The Guardian

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