South Wairarapa Council Puts Its Faith In Wai+T Water Model
South Wairarapa is the first council to take the plunge into a proposed Wairarapa-Tararua water services entity, locking it in as its preferred option.
All eyes are now on partner councils Masterton, Carterton, and Tararua to see whether they too will lock in the option.
South Wairarapa deputy mayor Melissa Sadler-Futter said Local Water Done Well reform was a huge piece of work for the council and community.
'The next piece of action we will watch very carefully are the votes of our neighbours over the coming weeks.'
South Wairarapa councillors were unanimously in favour of progressing the Wairarapa-Tararua council-controlled organisation, but this united front was unlikely to be seen at the table in Masterton where concerns around price standardisation were still being raised.
Without standardisation, the Wairarapa-Tararua option was the cheapest for Masterton customers.
With standardisation, it was more expensive than the 'Masterton-only' option.
Although price standardisation was not a requirement of Local Water Done Well, some Masterton councillors have previously questioned what measures would be put in place to prevent it once the new entity was set up and whether these could be overridden by the entity's directors or the Commerce Commission.
The Local Government (Water Services) Bill said councils can provide a statement of expectations to the water services entity, but 'the statement of expectations must not include any requirements or expectations that would compromise that financial independence'.
It further said that 'if a water organisation receives a statement of expectations that is inconsistent with a direction or requirement imposed by a regulator, the regulatory direction or requirement prevails to the extent of the inconsistency.'
The Commerce Commission, which would be the regulator, said it would be able to 'consider whether prices are efficient – for example, whether they appropriately signal the cost of service and support efficient demand management'.
'Generally, setting prices at a level that reflects local network costs is more efficient than harmonising prices across a water organisation.
'Once the Local Government (Water Services) Bill has been finalised and enacted the Commission will be able to make related decisions.'
The Commerce Commission's water implementation director presented to Masterton District Council in a closed workshop on Tuesday.
Price harmonisation was one of the topics covered.
A fact sheet from the Department of Internal Affairs said price harmonisation and cross-subsidisation was not a requirement of Local Water Done Well.
'Concerns about potential cross-subsidisation of neighbouring councils' infrastructure, and harmonisation of pricing for consumers, should not be barrier to councils' discussions about joint arrangements,' the document said.
'Councils entering multi-council arrangements will have a lot of flexibility in deciding among themselves if, when, and to what extent prices are harmonised across districts, services, or groups of consumers.
'They may choose to begin price harmonisations immediately, on an accelerated path, or allow prices to align naturally over time as infrastructure needs are addressed, considering the specific infrastructure and service needs of different groups and areas.'
Masterton and Carterton had hearings scheduled for next week and deliberations scheduled for the week after.
Tararua would lock in its option on June 11.
Each council must submit its Water Service Delivery Plans to the Department of Internal Affairs by September 3 and must demonstrate financial sustainability.
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