MY ACCOUNT
STORAGE LEVELS
WATER DATA
ANNOUNCED ALLOCATIONS
Published on YouTube 18 December 2025 (Duration: 2:00)
[music plays]
[drone footage of Teemburra Dam]
Narrator: Every year, Sunwater incurs costs to operate, maintain and renew our assets. We do this to make sure our dams and other infrastructure can safely and reliably deliver water to our customers.
[graph showing operations costs remaining steady over five years]
Operations and maintenance costs don’t change a lot from year to year. They are passed through to customer bills in the year they are incurred.
But renewals costs can and do change a lot from year to year.
[graph showing variation in renewal costs over five years]
Renewals – or restoring the function or reliability of an asset – can be costly.
If we passed these costs through to customers in the same year we did the work, customer bills would go up and down dramatically from year to year.
[infographic showing how the variation in prices due to renewal costs is smoothed out using either the annuity or RAB method]
We make sure this doesn’t happen by using an annuity approach to smooth prices.
There is another method that smooths prices – the regulated asset base, or RAB method. The Queensland Government is currently considering a RAB method for renewals recovery.
[infographic showing forecast costs over 30 years and how the annuity contribution is calculated]
Here’s how the annuity method works.
We start by estimating what renewals work might need to be done over the next 30 years and how much that might cost.
We then take the total amount and calculate the annuity – how much customers need to pay each year over that 30-year period. This is called the annuity contribution building block.
[infographic showing how unexpected costs may crop up over the 30-year period]
Calculating an annuity needs very accurate forecasts.
But sometimes money must be invested in work we haven’t planned for and can’t delay – like fixing mechanical spillway gates, repairing flood damage, or dealing with an unexpected failure.
Over time, industry regulations and technology also change. The cost of renewing a pump station now may be nothing like what it will cost 30 years from now.
[graph showing the impact of unexpected costs on annuity balances]
When work is unexpected or costs are higher than forecast, the funds haven’t been collected ahead of time so customers can end up with large negative annuity balances.
This means the annuity contribution starts to work more like a RAB, where Sunwater incurs the cost and then customers pay it back.
[image of Coolmunda Dam, fading to infographic showing how the impact of unexpected work increased the scheme’s negative annuity balance from $3 million to $18 million]
This happened in the Macintyre Brook Water Supply Scheme in 2022 when the cost of the Coolmunda Dam Variable Counterweight Project hit the scheme’s annuity balance. Unexpected but essential work, including this major project, increased the scheme’s negative annuity balance from just over $3 million at the beginning of 2022 to more than $18 million by the end of 2024.
Although it hadn’t been accounted for in the original forecast, the cost still needs to be recovered.
[infographic showing how the annuity method recovers costs over a shorter period than the life of the asset]
Under the annuity method, the cost is to be recovered over only 30 years even though the variable counterweights are likely to last 50 years.
If a RAB were in place, customers would pay back the cost over the life of the asset – in this case, 50 years. Spreading the cost over this longer period reduces the amount repaid each year through customer bills.
[Sunwater logo appears with link to more information at bit.ly/2025RAB]
[music fades]