The Waitaki District Council is on the verge of a major decision that will shape how water services are delivered and paid for across the region, as it prepares to vote next week on whether to join a four-council joint water entity, Southern Water Done Well (SWDW).
The proposed partnership would unite the water services of the Waitaki, Clutha, Central Otago and Gore districts into a single regional organisation, with a shared cost of $13.8 million for establishment.
The DIA’s report, made public yesterday, firmly recommends the four councils adopt this model in order to meet the government’s Local Water Done Well reforms and sustainability requirements.
Speaking ahead of Tuesday’s formal vote, Waitaki District Council chief executive Alex Parmley acknowledged the public resistance but emphasised the urgency and necessity of the decision.
"DIA has done an initial assessment of the options we were looking at. So they’re going to mark our homework at the end of this when we submit our water services delivery plan and their assessment, which is going to be contained in the report, is that the joint CCO is the only financially sustainable option for the four councils,"
The assessment, included in the agenda for next Tuesday’s meeting, states "the establishment of a Southern Water Done Well water CCO comprising of the four councils’ water services is likely the only viable option for delivering a water services delivery plan that meets the legislated financial sustainability requirements for both water services and councils while managing the affordability impact of required water services charges on household budgets".
Public consultation across the four councils drew in over 1000 submissions, 57.5% favouring the in-house business unit model, the preferred option in Waitaki (54%) and Clutha, while only 26.7% supported the joint-CCO, most popular in Gore and Central Otago.
In the Waitaki district, the stand-alone CCO option was favoured by 21% of submitters, while the council’s preferred joint CCO (SWDW) option was favoured by just 15% of submitters.
However, Mr Parmley said the recommendation was about long-term viability, not short-term popularity.
"A regional water CCO will result in lower charges for communities than council in-house delivery," the DIA assessment stated.
Waitaki ratepayers can expect a 51% increase in water charges under the joint CCO, less than the projected 62% rise under an in-house model. Regardless of the model chosen, households will face higher water costs, and a key change across all options will be the separation of water charges from general rates.
"A lot of the detail around what does this look like and what will bills look like. That’s the stuff that still needs to be developed, but we need to get a decision first.
"Whatever route we go down, we’re going to need to separate out the water bill from the rates bill. The government said that needs to be clearly shown differently now and be produced as a separate bill."
If approved, the SWDW constitution would guarantee that each district’s water charges reflected its own costs — with no cross-subsidisation.
"Waitaki is not paying for Central Otago’s water and vice versa," Mr Parmley said.
Governance of the CCO would be via a shareholder group where each council got one vote, regardless of asset size. Although Waitaki has more assets and would hold a larger shareholding, it would still hold only one vote in decision-making. Directors would be appointed jointly by the councils.
The new company’s constitution and shareholder agreement are still under development, including details around voting thresholds for future changes.
Mr Parmley said the councils did not want to tie the company up so it could not decide anything, but for the most important things, all shareholders would need to agree.
"That’s about establishing that link between ownership, so it’s clearly shown that we still own those assets and, if the company was to be wound up for whatever reason, those assets would come back."
The joint-CCO’s initial $13.8m establishment cost would be loan-funded, with each council responsible for repayment.
Waitaki’s portion would be loaned to the CCO and repaid over time, without being directly passed on to ratepayers via water bills.
