As part of the State Government's selection process, residents within the project area are surveyed to determine the level of support for underground power, which includes an up front, estimated average cost.
In order to proceed, projects must have a majority level support from residents.
In September 2016:
Alfred Cove East property owners were surveyed - the response rate was 56.02 per cent and a support level of 71.5 per cent was received. This area is now being resurveyed due to an increase of 15.6% in the cost to the property owner, since first being surveyed.
Kardinya South property owners were surveyed - the response rate was 45.63 per cent and a support level of 59.5 per cent was received.
Melville North property owners were surveyed - the response rate was 47.4 per cent and a support level of 73.4 per cent was received.
As per the State Underground Power Program guidelines, projects are funded 50 per cent by the City of Melville (in the respective project areas), 25 per cent State Government, 25 per cent Western Power.
As part of the survey conducted by State Government, an estimated cost is included for residents to consider. This charge is calculated by State Government. Where projects proceed, the City of Melville are responsible for collecting these costs via the next rates invoices to applicable properties. Charges for both are sufficient only to cover the cost of the City’s cash calls to Western Power. There is no profit margin.
Charges levied to property owners
Charges levied to property owners comprised of two components:
- Connection fee - for an internal connection from the boundary of the property to the meter box
All properties in the relevant project area are checked to see if they already have a suitable connection. If they do, no connection charge is applied. If a connection already exists but needs more work to connect to the network, a modified connection fee is charged. If no connection exists, then a full connection fee is charged.
The City is advised of the total cost of connection work in the project area and this is then divided up among properties, taking into account the connection requirement above. All properties in the relevant project area are checked to see if they already have a suitable connection. If they do, no connection charge is applied. If a connection already exists but needs more work to connect to the network, a modified connection fee is charged. If no connection exists, then a full connection fee is charged.
The City is advised of the total cost of connection work in the project area and this is then divided up among properties, taking into account the connection requirement above.
- Network charge - for works external to the property - for works external to the property
As a whole, this is calculated as the total project cost - minus the total connection fees (above).
To calculate each individual property's contribution to the network charge, the total is divided by the number of properties in the project area.
As the City does not have access to individual installation costs, electricity consumption figures, property values, or household incomes etc. the network charge is apportioned equally among all properties in the project area.
Estimated Costs to Property Owners
Within the original survey, an estimated cost was included for each project area:
- Alfred Cove - average of $4,740 per property (originally estimated at an average of $4,100, when surveyed in September 2016)
- Kardinya South - average of $4,450 per property
- Melville North - average of $3,200 per property.
The reason for charging interest is because the City must have funds to make scheduled contract payments to Western Power, even though payments from residents are in instalments.
If all contributions from ratepayers have not been received, the City would either have to borrow funds to make Western Power payments - incurring an interest charge - or withdraw invested funds and incur an interest loss. This would mean the cost of financing an underground power project would be borne by all ratepayers, not just those in the project area, in their rates charge.
The City does not make any profit from the State Underground Power Program.
The surveys are sent out by the State Government do not include this element of the costs becuase, for the most part, the surveys are generic throughout the Perth Metro area and it is up to individual Councils on how they address this issue of interest.
While the City is permitted to charge up to 11 per cent, the current 4 per cent charge reduces the impact to ratepayers and is equal to the rate charged to all ratepayers who elect to pay their rates by instalments.
The interest rate is reviewed each year as part of the budget process and the City has been able to continually reduce this interest rate since 2008/2009 - when it was 6.5 per cent, to 4 per cent in 2016/17.
Once Western Power have issued an invoice to the City, charges will be added to the next rates notices.
For two of the three current projects - Kardinya South and Melville North, it is anticipated Western Power will invoice the City during the first half of 2018, therefore the an interim charge will be applied to 2017- 2018 rates notice, with the remaining charges applied over 2018-2019 and 2019-2020 rates notices.
For the Alfred Cove East project (pending the results of the second survey in July 2018), it is anticipated Western Power will invoice the City during the second half of 2018, and an interim charge will be applied to 2018- 2019 rates notice, with the remaining charges applied over following rates notices.
Charges are applied to ratepayers according to the timing of the City's required payments to Western Power, not to the timing of the work being done in the area. This is done so in a way similar to a new home build, where progress payments are made along the way rather than one single payment when the building is completed.
Your rates notice states a standard four instalments option is available, however the City is able to tailor a payment arrangement to the individual over a repayment period of five years from the date of the notice issue. Interest is applied at the same interest rate as that imposed by the Council on payments by instalment when adopting the Annual Budget (currently 4 per cent).
As per rates payments, a credit card surcharge applies at a rate based on the average merchant fee charged to the City. It does not include any profit margin or “gouging”. It is cost recovery only.
Contact us to arrange an alternative repayment plan.
State Government legislation and funding provides eligible pensioners or seniors with a Commonwealth Health card with a rebate of up to 50 per cent if they pay the full charge by 30 June of the current financial year. If the account is not paid in full by 30 June of the current financial year, then the State Government will not pay the rebate.
This legislation also prohibits any interest or administration charges to eligible pensioners or seniors - no interest charge is applied to eligible pensioners or seniors.
Some councils include the charge of an area-specific project, within their overall rates charge, which means that all ratepayers are paying for a particular project even though they may not benefit. In other words, irrespective of whether or not a ratepayer is receiving, or has previously received the underground power installation they will be paying for it as part of their rates charge.
This also means those same ratepayers will continue to fund other projects over a number of years until they themselves receive underground power, if that occurs.
The City of Melville only charges ratepayers in the project area for the costs relating to that project.
The majority of the City of Melville already has underground power and ratepayers in those areas have already paid for it previously, either via their rate notice, or as part of the property cost when the land was subdivided (e.g. areas such as Leeming, Kardinya, Winthrop). To include the cost now as part of a general rates charge to all ratepayers would be asking those people who have already paid, to pay again.
A separate charge to the people receiving the service is fair, open and transparent.
Once project areas have been selected by the State Government they undergo a design phase before works begin.
During this time the City does not have any detailed information regarding where green domes and street lights will be placed. When the design and selection of the proposed sites for the installation of transformer and switchgear cabinets is known, the City will advise property owners in the immediate vicinity of the equipment and invite them to provide comment.
Where there is an interface between the existing overhead infrastructure and the new underground power system, Western Power endeavour to design the interface so that no overhead infrastructure remains on the verge area of a property that is part of the new underground power network.