Upset irrigators dive deeper into watery figures after review finds huge price error

Rockhampton region irrigators are diving deeper into the ledgers of Fitzroy River Water after an independent review uncovered glaring pricing errors.

The Fitzroy River barrage at 100 per cent capacity.

Concerned Rockhampton region irrigators are diving deeper into the ledgers of Fitzroy River Water after an independent review of huge price increases revealed glaring errors.

The irrigators had demanded an investigation into the justification behind FRW’s proposed 53 per cent increase on water charges from late last year and macadamia farmer Henrik Christiansen said this week their concerns had been justified with pricing set to be slashed by more than half.

Henrik Christiansen irrigates 120,000 macadamia trees on 340ha of land in South Yaamba. He said the impact of a new water pricing structure was significant.

“They stuffed up their Excel spreadsheet calculations,” he said about FRW’s response to an auditor’s findings,” he said.

“The increase was actually 20.5 per cent, not 53 per cent.

“What that does is open up a whole heap of other questions that we’ve asked them about (particularly concerning) $670,000 in overhead expenses.

“I guess going through this, we’ve just seen a whole lot of dirty laundry that we know doesn’t make sense. So we’ve still got a lot of questions on how they actually get to this number and how they justify the number.”

The revised pricing path for the Rockhampton Region's Fitzroy River Water irrigators.

FRW officers met with irrigators recently to update them on the many questions they raised at meetings held late last year.

The officers told irrigators the AEC Group Economic and Financial had been engaged to check for anomalies in the “inputs and mechanics applied in calculating the price path for allocation holders” and had located several errors.

“The cumulative impact has resulted in lower charges (20.5 per cent, down from 53 per cent) when compared to the originally proposed pricing,” the FRW letter to irrigators said.

“The benefit of the external review is clearly evident and this has been added to the review process to ensure all future price path modelling is subjected to independent assessment.”

The $55,000 estimate for FRW’s annual increase in revenue from the increased charges was also corrected to $220,000 after FRW found the lower figure was in fact a quarterly amount.

Mr Christiansen said irrigators were now seeking more answers including into how FRW calculates its $1,006,000 in operating expenses with a focus on the overhead amount (services from other council units) of $670,791.

The expense breakdown for the Fitzroy River Barrage operating costs.

”They’ve yet to come back to us on how they actually get the $670,000,“ he said.

“So 65 per cent of the barrage operating expenses are overheads, which doesn’t make a lot of sense, but if you look at the labour cost line there, it’s only quarter of the total at $245,000.”

While there is some satisfaction that the corrections are being made and questions are being answered Mt Christiansen said irrigators were wondering why the errors were not detected earlier.

”I think the main thing is no one really picked up that this didn’t pass the smell test,” he said.

“When your spreadsheet pushes out a 53 per cent increase, you sort of have got to go back and have a look and go, that doesn’t sort of feel right so let’s go and have another look.”

He said 20.5 per cent was still a big jump however it was a more defendable number, but was it “fair and reasonable” compared to Eden Bann Weir which charges $11 per ML compared to FRW’s revised $46.33 pr ML for medium priority and $69.50 per ML for high priority uses?

“So it’s just the fundamental structure of FRW and how, because they’re a council-owned entity, they need to account for a return on equity that actually is not equity,” he said.

This table shows the replacement cost of the barrage.

“It’s a return on evaluation really and that’s hurting everybody involved, like the ratepayers.

“It’s the handcuffs they believe they have on that water system. Whereas if the barrage was owned by Sunwater that would be totally different.

“They don’t have the same restrictions and that’s why you’re seeing different pricing mechanisms for both Rookwood ($21.68 per ML) and Eden Bann ($11.24 per ML) weirs.”

Mr Christiansen said he was hoping to hear back from FRW in the next week.

Rockhampton Region’s water committee Councillor Edward Oram said on Wednesday that a revised pricing structure would be presented to council for consideration following the consultation with water allocation holders to address their concerns with the review of the Fitzroy Barrage Water Supply Scheme (FBWSS).

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