Water pricing framework (PREMO) review 2016

We reviewed our water pricing approach and developed the PREMO framework, which puts customers at the centre of a water business's decision making.

Our Water Pricing Framework and Approach: Final Paper describes the approach we use to review Victoria’s water prices from 1 July 2018.

Our pricing framework gives water businesses strong incentives to deliver better value through customers

It does this through the new PREMO incentive mechanism, which focuses on five elements: performance, risk, engagement, management and outcomes. These elements form the 'PREMO' acronym.

The PREMO framework links reputation and financial outcomes to the level of ambition in a water business’s price proposal. It also holds water businesses accountable for the actions and decisions they make and for delivering the service outcomes proposed.

The review began in April 2015 with the release of an initial consultation paper. This followed the October 2014 revision of the Water Industry Regulatory Order (WIRO), which allowed us to consider a broad range of pricing approaches to deliver efficient pricing and service outcomes for Victorian water and sewerage customers.

Our consultation period spanned 18 months

It included:

• April 2015 – release of our initial consultation paper outlining our review process
• June 2015 – release of a number of papers prepared by regulatory experts to assist in the ideas generation process
• November 2015 – our water pricing conference, which featured a number of Australian and international speakers
• May 2016 – release of our position paper proposing our new pricing approach at a high level based on the cumulative consultation undertaken so far
• September 2016 – release of a commissioned KPMG paper, and a workshop with the water businesses, to explore how the proposed PREMO framework could apply in practice
• October 2016 – release of a staff consultation paper on the proposed PREMO assessment and rating criteria.

We invited and received a number of submissions from water businesses, consumer groups, industry groups and other interested parties, in response to the above papers and events.

View more information on our water price reviews.

Submissions on the Review of Water Pricing Approach position paper

Post conference submissions

Submissions on assessing and rating PREMO price submissions staff paper

Submissions on the Review of Water Pricing Approach consultation paper