Allconnex Turmoil
Date: 29-Jun-2017
In early August Logan and Redland councils made decisions about their ongoing involvement in the Southern SEQ distribution/retail business, Allconnex Water. These decisions follow the announcement on 25 July that Gold Coast Council would withdraw from the jointly-owned Distribution and Retail entity (see e Flash #128) at a projected cost of $60 million dollars.
A few weeks later another of the joint owners, Logan City Council voted to remain in Allconnex. The council cited the high costs to decommission the business and uncertainty over some conditions controlled by the State Government as their reasons for staying in the entity.
Then, on the 8th August, Redland City Council announced a decision to withdraw from Allconnex, see (http://www.redland.qld.gov.au/EnvironmentWaste/Water/Pages/Water-Challenges.aspx). The Council noted the expected high costs of decommissioning but preferred the known risks of reforming their council water business versus the unknown risks of a Distribution and Retail entity jointly owned with Logan City Council. Interestingly, the Council media release states that they have advice “from the Minister for Energy and Utilities stating that Council would be entitled to recover direct and consequential costs from Gold Coast City Council”.
Redland City Council’s press release noted that it has been a difficult period for water employees. That is putting it mildly. Over 800 industry workers are now faced with the uncertainty of moving from the centralised organisation back into Councils. This follows previous changes when councils were amalgamated and then when the institutional arrangements were commenced. The roller-coaster ride appears to be continuing.
The history:
- In 2008 the State took control of bulk water assets in SEQ and mandated a restructure of local government-owned distribution and retail functions. Many staff shifted roles.
- In 2009, an SEQ-wide distribution retail entity was formed (briefly)
- In 2010 three local government entities were formed, namely:
- Unitywater (servicing Sunshine Coast and Moreton local government areas)
- Queensland Urban Utilities (QUU - servicing Brisbane, Ipswich, Somerset, Lockyer Valley, Scenic Rim local government areas)
- Allconnex Water (servicing Gold Coast, Redlands, Logan local government areas)
- This change resulted in many staff movements and uncertainty, but across the region water industry managers, operators and staff have worked tirelessly to come to grips with the new structures, imposed price caps, charges and reporting regimes as well as dealing with confusion and anger from customers over complex price increases. Given the massive changes and their early stage of development, progress was positive and rapid.
- On 7 April 2011 (see e Flash #114) the State announced that legislation mandating local government distribution and retail entities was to be repealed and water prices capped. This meant that the local governments of SEQ had to make a decision about whether to pull water functions back under direct council management, or leave them with the council-owned entities. The industry was again thrown into a period of a high-level of uncertainty.
- In the North, council owners of Unitywater announced their support to continue that organisation (http://unitywater.com/news.aspx?NewsID=135) and councils in the central area of SEQ backed the continuation of QUU (see http://www.urbanutilities.com.au/uploads/file/Media_Releases/20110701-Councils_back_QUU.pdf).