TasWater privately blamed regulator for 'blatant mistake' over sewerage bills

In September, some of TasWater's business customers, such as sporting clubs, reported enormous jumps in their fixed sewerage charges.

Internal emails, secured through right to information, show TasWater leaders blamed the increase on an "error" by the Office of the Tasmanian Economic Regulator.

TasWater says some customers' bills have already been amended while others are paused as the utility works on a solution to the bill increases.

Senior leaders at TasWater privately blamed the state's economic regulator for a "blatant mistake" that threatened to cost some Tasmanians tens of thousands of dollars in extra charges, documents show.

In September, the ABC spoke to TasWater customers whose bills skyrocketed after the Office of the Tasmanian Economic Regulator approved a new pricing structure, valid from July 2026 to June 2030.

It introduced a new way of billing some non-residential customers for the fixed component of their sewerage bill — basing it on water connection size, rather than on their estimated demand on the sewerage network.

One business owner said the change saw their bill rise from $630 a month to $3,800 a month, while another sporting association said it copped a $1,400 monthly increase.

Before the change took effect, TasWater had predicted the change could disadvantage some customers and had proposed a solution — some customers with larger pipes would instead be charged as if they had a smaller 20mm connection.

But the regulator knocked back the remedy, saying it would create inconsistencies.

When the billing changes came in, it led to outcry and an intervention from Premier Jeremy Rockliff, who called on TasWater to pause the billing structure and work with stakeholders to find a more sustainable way forward.

But now, documents released to the ABC under right to information (RTI) laws show how TasWater's leadership internally reacted after the blowback, laying the blame on the regulator.

TasWater leaders also initially argued that any attempt to reduce the bills must be matched with pricing increases elsewhere, to minimise the impact on its budget.

For its part in knocking back the potential remedy, the regulator argued: "the potential for broader impacts across non-residential customers, which have since arisen, was not brought to [its] attention".

It also said it only set the maximum amount TasWater could charge, but the water utility was free to charge less.

On September 10, after concerns about "unintended" sewerage price hikes were reported in the media, the premier issued a statement urging TasWater to pause and work with stakeholders.

Internal emails, secured through the RTI process, show the premier's media release was promptly forwarded to TasWater leadership, including chair Kevin Young and CEO George Theo.

Sep 10, CEO George Theo to chair Kevin Young:

"Politics being played where the Premier is asking TW [TasWater] and the Councils to reconsider price increases.

"We should consider our response, what he is asking for is not for us in my opinion its a regulatory matter."

Mr Young wrote back to Mr Theo the same day.

Sep 10, chair Kevin Young to CEO George Theo:

"I think it would be worthwhile for the premier and/ or treasurer to write to the economic regulator pointing out the major problem from the price determination and asking the regulator what can be done to correct the error?

"I think it is a blatant mistake and miscalculation that needs to be corrected."

On September 11, Mr Theo again wrote to Mr Young, saying if the bills were to be reduced, those costs must be recouped.

Sep 11, CEO George Theo to chair Kevin Young:

"As part of any review to address this 'mistake' it must be done on the basis that TWs [TasWater's] total revenue remains the same.

"This means if non-residential sewer access charges are to go down, something else has to go up, to maintain revenue neutrality."

On September 15, the senior leaders met with the Office of the Tasmanian Economic Regulator, which asked TasWater to investigate issues with the new sewerage fixed charge structure.

"TasWater reiterated that any pricing adjustments would need to be revenue neutral to ensure the business remains financially sustainable and capable of delivering its capital program," the document said.

By September 30, TasWater had analysed the scale of the large bill increases and identified some customers potentially affected by the issue.

It believed that under the new model, 187 of its non-residential customers would see bills rise by at least $10,000 over the year, which represented at least a 100 per cent increase from the year before.

It also estimated a cohort of 1,070 customers, who had a connection greater than 50mm with no dedicated fire connection, as potentially exposed to the increases.

This included 33 sporting fields and 62 mixed-use sporting facilities.

The document said providing immediate relief for 91 customers whose bills were impacted by more than $500 and 50 per cent, by charging them as though they had a 20mm connection regardless of the actual size, would reduce its revenue by $1.25 million.

On October 2, following weeks of concern from politicians and customers, TasWater said it recognised the issue and would investigate a new way forward for impacted customers.

It is not yet known what this will cost the utility.

The Office of the Tasmanian Economic Regulator's Final Report, released in April this year, shows TasWater had flagged its proposed changes to the fixed sewerage charges could have an outsize impact on some customers.

It had recommended non-residential customers with a "low sewerage discharge factor" be charged based on a 20mm connection size, regardless of the actual connection size.

"The proposal is expected to primarily capture sports fields, sporting grounds and reserves, which typically have low sewerage discharges relative to their water use," the report states.

However, the regulator opted against the idea, saying other customers that required a large water connection for pressure or operational reasons but did not add much sewage load to the network would not be captured, creating inconsistencies.

When contacted for comment about this story, a regulator spokesperson said the "prevalence and significance of varied connection arrangements", including combined fire and water connections, and their potential impact on sewerage charges were "not brought to its attention" during the price investigation.

They said it initiated discussions with TasWater once this became apparent.

The spokesperson also said it approves only the maximum amount TasWater can charge, meaning the water utility does not need regulator approval to charge less to address these issues.

TasWater general manager of customer and community Callan Paske said, as of October 28, eligible customers who manage sports grounds have been notified and their bills are in the process of being amended.

He said the utility was working on a solution for other eligible customers.

"Their bills remain paused while we work through this," he said.

He said no additional costs would be passed onto customers.

But he also said the costs arising from these changes would need to be absorbed and could potentially require deferral of some infrastructure investment.