Proposed $15m Christchurch water provider could see households charged for use

Wednesday, 12 February 2025

Creating a new entity to manage Christchurch’s water will cost $15 million and could lead to residents being charged based on the volume of water they use.

Ratepayers are currently charged for water services based on the value of their homes rather than the amount they use.

The Christchurch City Council is considering how it will deliver waste water, drinking water and storm water services to meet new Government demands.

The Government has scrapped its predecessor’s unpopular water reforms in favour of a new plan that gives councils the ability to choose from six different models.

Council staff have assessed three models including an in-house option, which is essentially the status quo with some tweaks, and forming a council-controlled organisation (CCO) - a separate council-owned entity with its own board and chief executive.

The third option also involves creating a CCO, but only for wastewater and drinking water. Stormwater would stay in-house.

The models were presented to councillors at a public briefing on Tuesday.

Staff did not state their preferred option, but will make a recommendation to councillors next week. The council will decide next week which one it supports before going out to public consultation in March and April.

Under the rules, the council has until September to make a decision.

All three options were assessed by staff, as being able to achieve financially sustainability by June 2028, which is required by the Government.

All three were also deemed to have the same ability to ensure water services remained affordable and reliable.

However, the business case found the in-house model scored the highest because it aligned with the council’s priorities and existing infrastructure.

Council principal policy adviser Luke Adams said the in-house option used existing systems and governance structures, would provide stability, and have minimal short-term transition costs.

Some changes would be needed to ensure water revenue was used only for water services.

Under the in-house model, the council would determine how it paid for water - whether it continued to use rates or move to volume-based pricing.

A CCO would have to move away from rates funding within five years and put in place fixed fees or volumetric pricing.

The CCO models would cost about $15m over three years to implement, council accountant Mitchell Shaw said.

Most of the cost was associated with installing water meters. Most homes in Christchurch already have water meters, but most multi-unit properties have only one meter.

The council already uses meters to monitor excess water usage, but most multi-unit properties are exempt.

People are charged only if they use more than 900 litres of water a day. The median usage is 480 litres a day.

A CCO could also borrow up to 500% of revenue, whereas the council could only borrow up to 280% of revenue.

However, council chief financial officer Bede Carran said there was ample borrowing capacity under the in-house model.

Councillor Yani Johanson wanted to know which option would lead to the quicker removal of chlorine from the city’s drinking water.

City infrastructure general manager Brent Smith said all options would have to comply with the rules set by water regulator Taumata Arowai.

Other options ruled out by staff include forming a CCO with other councils, creating a service agreement with other councils, and creating a trust governed by community members.

Staff said those options were not advanced due to “governance complexities, financial constraints, or misalignment with Christchurch’s specific needs and priorities”.

The Selwyn District Council decided in November to consult the public on a CCO model, or a new department created in-house.

Kaikōura, Hurunui and Waimakariri councils announced last year they would work together to create a plan.