New Customer Contributions Framework

The Essential Services Commission recently completed its two year review of Victorian urban water businesses’ connection contribution regulatory regime (called new customer contributions, NCCs or developer charges).  

While the updated regime retains the principled approach of having regard to incremental costs and benefits of the new connection or connection augmentation, farrierswier has supported the commission throughout this review to significantly increase the transparency requirements for how both regulator-approved ‘standard contributions’ and negotiated contributions are administered.  

What’s new? 

Regulator-approved connection policies | Water businesses must prepare comprehensive connection policies, published and approved through price reviews, explaining connection processes, NCC eligibility, gifted asset requirements, rebate arrangements, fees and charges, and dispute resolution pathways.  

Justifying standard charges | Standard NCC proposals must be supported by modelled NCC calculations, justified inputs, cost/benefit attribution policies, and evidence that incremental benefits (including incremental revenues) have been properly considered. With limited exceptions (e.g. for small subdivisions), water businesses proposing standard NCCs must publicly release development servicing plans showing growth assumptions, timing, sequencing, and locations of planned infrastructure, helping applicants understand how growth planning influences charges and asset gifting requirements.  

Transparent and predictable negotiations, fees and asset gifting | Connection policies must set out negotiation processes, including information requirements, timeframes, how the incremental costs and benefits pricing principles will be demonstrated during negotiations, prudential requirements, and arrangements for gifted assets and rebates, including when asset upsizing occurs. 

Empowering the sector with models and costing method examples | The commission will publish illustrative NCC calculation models and user guides to improve transparency, consistency and understanding of costing approaches for both water businesses and connection applicants.  

Monitoring NCC administration | Annual NCC disclosures will support transparency in how NCCs and connection processes are administered and enable comparison.