NSW pricing authority: Sydney water prices set to fall

Sydney Water argued in September last year for water bills to increase by 15 per cent over four years so it could carry out repairs to ageing pipes.

However, in a draft report the Independent Pricing and Regulatory Tribunal (IPART) said water bills should be lower because the Sydney desalination plant is not operating.

"Our draft decisions mean that the annual water and sewerage bill of a typical residential house will fall by $57 in real terms by 2016," IPART chairman Peter Boxall said in a statement.

NSW Finance and Services Minister Greg Pearce said he acknowledged IPART's draft report and was aware of the impact of water prices on households.

"The important thing for IPART now is to find the right balance between affordability for customers and maintaining Sydney Water's infrastructure and services into the future," Pearce said in a statement.

Opposition water spokesman Luke Foley said IPART had "done the right thing".

But he was concerned Sydney Water would slash services and fix sewerage tunnels on the cheap to deliver profits for the NSW government.

"It's now time for the O'Farrell government to do the right thing and drop its demands on Sydney Water to deliver massive profits and dividends so the utility will not be forced to slash services," he said in a statement.

"Sydney Water has to meet the huge 78 per cent profit increase set by the O'Farrell government.

Pearce said the opposition's claims about dividends were hypocritical.

"NSW Labor took almost $1 billion in dividends from Sydney Water in their last five years of government without investing in essential infrastructure," he said.

"If NSW Labor actually believed what it is saying, it would have done something about it in their 16 years of government."

The Australian Services Union (ASU) warned that with the government's demand for increased dividends, Sydney's water supply and quality would be "pushed to tipping point".

ASU NSW and ACT Secretary Sally McManus said reduced costs would result in job cuts and cost-cutting measures by management.

"If Sydney Water management continues with its plan to deepen cuts and compromise services, the people of Sydney and the Illawarra will suffer as will our beaches and environment."

Anglicare Sydney CEO Grant Millard said Sydney Water's original recommendation of a 15 per cent increase in water prices plus inflation was unreasonable.

"With electricity prices rising by over 17 per cent in 2011, it was essential that IPART recommended price controls on other utilities to ease cost-of-living pressures on families," he said in a statement.

Anglicare also called for Sydney Water to increase funds for customers facing hardship and extend them to people who are not owner-occupiers.