Adelaide desalination plant too expensive to run

THE Adelaide desalination plant is too expensive to run and will supply only four litres in every 100 used by SA households, not the 50 litres in every 100 it was designed for.

THE $1.8 billion Adelaide desalination plant is too expensive to run and will supply only four litres in every 100 used by SA households, not the 50 litres in every 100 it was designed for, SA Water has admitted.

The average household water bill has more than doubled to $1334 each year to pay for the plant, as well as another $400 million pipeline to connect the northern suburbs to the desalination network in the south.

But inquiries by The Advertiser have revealed an SA Water review of a decision to put the 100 GL plant on “standby’’ after it completes a proving period has shown it is not needed — and at five times the production cost of River Murray water, it is too expensive to run.

“At minimum production, the plant will produce approximately 8GL of water, approximately 4 per cent of our annual demand of more than 190GL,’’ SA Water stated in a written response.

“We will still be seeking to source water from its lowest cost source to minimise operating costs.”

CSIRO figures show that in SA, River Murray water costs 44 cents per kilolitre to pump and treat, stormwater could be harvested for $1.47 per kilolitre, and at a minimum Port Stanvac desalinated water costs $2.41 per kilolitre.

The SA Water decision means the only reason to keep the plant running is to keep some water flowing through the system to avoid maintenance problems: “Operating the plant at its lowest capacity will minimise longer-term maintenance costs as the plant’s critical infrastructure, such as pipes, pumps and tanks, will be used and maintained at an operational level’’.

The decision confirms a policy revealed by The Advertiser in 2012 that despite recouping the cost of building the plant from customers, it was not needed for Adelaide’s water supply.

Meanwhile, welfare agency Uniting Communities has scoffed at a request by SA Water for its bills to be cut by $50 on average next year.

SA Water has taken the unusual step of making details of its State Budget submission public, which proposes a $50 cut to be approved by the State Government and the Essential Services Commission of SA.

But Uniting Communities utilities expert Mark Henley said market factors should be forcing down water bills by far more than $50.

For example, cuts in international interest rates alone meant that SA Water in recent years had saved more than the average $50 it was offering back.

“Put these together and water prices for SA consumers can come down a lot more than the piddling 5 per cent mooted,’’ Mr Henley said.

“A 5 per cent reduction is laughable after a more than 300 per cent increase on the average water bill over the last decade, so this is a bit like someone taking $100 from you and giving you back $5, and expecting you to be very excited by this.

“A significant part of SA Water costs are the return on money raised to build and maintain the network.

“Global interest rates are very low now, so the costs of capital are much lower than five years ago. This alone should result in a much bigger than 5 per cent reduction in water bills for consumers, through a much lower weighted average cost of capital.

“The other part of the return on investment story is the, we believe, massive over-valuation of the regulated asset case, which is the other large cost.’’