Council meeting agenda - 4 June 2012 - Clarence City Council

CLARENCE CITY COUNCIL – GOVERNANCE- 4 JUNE 2012 108
Discussions with key suppliers who are likely to be affected by cost shifts
indicate that their own cost (and hence pricing) structures are unclear post 1
July 2012.
2.13. Studies undertaken to date vary markedly in the predicted effect of carbon
pricing on Local Government. The NSW economic regulator has reported an
estimate of 0.6%, Federal Treasury predicts an effect on CPI of 0.7%,
Municipal Association of Victoria members have been advised a figure of
0.8% and media reports have put the cost increase at up to 3%.
2.14. It is clear that the 2 primary cost drivers for Local Government in relation to
carbon pricing are electricity and larger landfill sites (annual emissions in
excess of 25,000 equivalent tonnes of carbon). Council’s annual electricity
charges are in the order of $1.2 million. An effect of 10% (which has been
suggested for mainland Councils) would therefore give additional costs of
$120,000. There is potential, however, for Tasmania’s power pricing to be
less affected than other States due to its extensive use of hydro power
generation. In relation to landfill, the Copping site is expected to exceed the
25,000 tonne threshold. However, a facility is to be established at the site to
extract methane gas, generate electricity and feed this into the grid. Advice
from the Authority is that this will at least off-set any effects from carbon
pricing. Pricing of waste disposal at Copping has been priced accordingly.
2.15. Given this range of information on carbon pricing and having regard to other
cost pressures affecting Council’s estimates such as waste charges and
infrastructure renewal funding, it is recommended that Council provide for the
effects of carbon pricing at the lower end of the range of estimates. While this
creates the potential for further cost increases in 2013/2014 (a small additional
increase is anticipated in any event), it ensures that Council is not likely to
over-recover in 2012/2013, a matter which is expected to receive close
attention from the regulators. On this basis, the overall effect on the rating
requirement provided by the draft Estimates in relation to carbon pricing is
0.7%.