Local Water Done Well

Safe drinking water and the safe disposal of wastewater have made massive differences to our health and wellbeing, even in the past few decades. How we care for water affects not just us and the environment today, but our future.

It’s not surprising then that managing community water services is one of the biggest items in the Council’s budget. And meeting the costs of delivering these community water services is increasing. Some reasons for that are:

• old pipes and infrastructure wearing out
• increases in labour and materials
• increased community expectations
• environmental and health standards
• population and economic growth.

Since March 2024 we have been looking at several different options for the future delivery of water services including delivering water independently, as well as working with the South Taranaki and New Plymouth district councils to consider what joint water services delivery could look like in Taranaki.

This is due to the introduction of Local Water Done Well (LWDW), the Government’s plan to address New Zealand’s water infrastructure challenges.

After a lot of work and thorough investigation by all councils we are proposing that the best way to deliver safe, reliable and affordable water services over the next 30-plus years is through a regional council-controlled organisation.

This would be jointly owned by the South Taranaki, Stratford and New Plymouth district councils.

We’d like your thoughts about this proposal, and the alternative option of keeping water services within the Stratford District Council.

Community water services include:

Stormwater services are not included in the proposed regional model

Stormwater services work closely with many other council services and activities, including roading and parks. They also directly impact land management and growth planning. They are very different between each Taranaki council, and at this stage will be best delivered individually. The three Taranaki district councils have agreed that they will keep control of stormwater services at this time. That position may change in future, but the current consultation proposal for a joint Taranaki water service delivery model is for drinking water and wastewater services only.

About our water services in the Stratford District

• We currently provide water services to 71% of the district’s residents and wastewater services to 61%.
• This covers 3,125 water connections and 2,765 wastewater connections.
• The cost to replace our three waters assets is approximately $151 million
• The cost tooperate our water services cost approximately $4 million annually, which is about 14% of Council's total operating expenditure
• In the 2023/24 year we supplied 934,569m3 of drinking water
• On average we treat 1,576m3 of wastewater daily
• Due to significant capital works planned, the water services debt is expected to increase from $11 million to $31 million over the 10 years of the Long Term Plan (LTP) 2024-2034.

Key investments in the next 10 years include:

• Additional water storage $9.4 million
• Reticulation and safety renewals $8.5 million
• New Pātea River crossing for trunk main $5 million
• Replacement of the 100 year old grit tank and raw water delivery line $4.2 million
• Desludging of our wastewater pond to increase capacity and improve discharge quality $3.4 million
• Completion of the universal water metering project $1.5 million
• Upgrade of the wastewater treatment plant to an advanced treatment system. This project is anticipated to cost $50 million and to be completed over an 8-year period, commencing with the renewal of our wastewater resource consent in Year 9 of the Long Term Plan.

SDC has no renewal backlog. We have historically invested in essential services as appropriate to ensure a general aligning of our renewal budget with our replacement profile.

Tēnā koutou kātoa

The future management of council’s water, wastewater and stormwater services has been in the political spotlight for quite some time. After years of research, planning, political changes and more, our community is now at a crucial point where we need to decide how water services will be delivered in the future.

In early 2024, the Government introduced the Local Water Done Well (LWDW) reforms, a variation on the original 3 Waters reforms that aims to address New Zealand’s long-standing water infrastructure challenges.

Due to careful investment over the years our water services infrastructure is solid, and our debt levels are manageable. However, we have some big and expensive projects ahead, especially around wastewater, and the cost of meeting the Government’s environmental and health standards is only increasing. Whatever future delivery model is chosen, it’s clear that water service delivery is going to be more expensive than it currently is.

The LWDW framework puts more choice and control back in the hands of councils and communities, allowing us to decide whether we continue delivering water services on our own, or work in partnership with other councils. After careful consideration and expert advice, we’ve narrowed it down to two options:

• A local, in-house delivery model – similar to what we do now, but with some changes.
• A regional model – where Stratford teams up with South Taranaki District Council and New Plymouth District Council through a joint council-controlled organisation.

Both options are financially viable and meet the latest published requirements from Government, but we think working together offers real opportunities to improve efficiency and future-proof our services.

All three councils are proposing to change to a regional model, but we want to hear what you think.

This decision is important. Clean water and reliable wastewater services are essential, not just for our health and environment, but for the strength of our local economy and the wellbeing of future generations. And it’s not just about what works today, but what will work best for our communities 10, 20, even 30 years from now.

We acknowledge that this is a very complex issue with many factors to be considered, all of which carry pros and cons, and all of which have an impact on everybody in our district.

Hearing from our community is an important part of our decision-making process. I urge you to read through this information, to ask questions if you have them, and to talk with others in the community to help you form your own view.

Your submissions are vital to help us determine the best approach going forward.

Ngā mihi

Neil Volzke
Stratford District Mayor

Local Water Done Well (LWDW) is the Government’s plan to address New Zealand’s water infrastructure challenges.

It aims to provide local councils with the choice of how they will provide reliable and safe water services to their communities over the next 30 years and beyond.

Under LWDW councils can choose to deliver water services themselves, with other councils, or through other arrangements so long as they can show their choice will meet the Government’s core requirements. These include cost effectiveness and affordability, financial sustainability, and compliance with legislation. Councils and water organisations will not be able to privatise water services under LWDW.

Water and wastewaster delivery needs to meet the following:

• Will be financially sustainable – meaning income from water services delivery meets all costs, including service, investment and finance costs.

• Ensures sufficient investment to meet the needs for replacement and renewal of existing infrastructure, and building new to meet future demand.

• Is cost-effective and affordable, with prices that reflect the costs of delivery.

• Is ringfenced, or completely separate from the rest of Council’s income and expenditure.

• Meets other new financial and regulatory requirements.

Councils must complete a Water Services Delivery Plan (WSDP) by early September 2025, showing how their proposed choice meets these requirements. We’ve produced draft WSDPs for both options considered in this document and both are viable under the existing legislation.

Any proposed model and plan has to meet Government criteria. If the Government is not satisfied that a preferred plan meets requirements, it can step in to help.

Funding water services delivery

One of the features of LWDW is that water services organisations that are separate from councils can borrow up to five times the amount of revenue they receive. This is about twice the ratio that most councils are permitted.

Borrowing (using debt) to fund infrastructure investment spreads the cost of something that can be very expensive over the entire time of its useful life. That means it’s paid for by all the people who benefit from it. Debt can spread costs over many years, keeping charges to consumers fairer and more affordable.

Any borrowing by a water service organisation must be guaranteed by its owner council or councils.

If you want to dive a bit deeper, there is a lot of information about Local Water Done Well, as well as links to the new regulation and the current Water Services Bill on the Government’s Department of Internal Affairs website: www.dia.govt.nz/Water-Services-Policy-and-Legislation

This proposal is about deciding on the best option for delivering water services in a way that will meet the needs of the community and the Government’s new financial sustainability and water regulatory requirements

Under Local Water Done well, there were several options we could investigate. These included keeping delivery in-house; establishing a consumer trust; or setting up a single (SDC only) or jointly (SDC, STDC and NPDC) owned council-controlled organisation.

Not all options were suitable for Stratford, such as establishing a consumer trust or setting up a council-controlled organisation on our own - so these options were ruled out. This left us with two, financially sustainable options to further investigate; establishing a Taranaki water services council-controlled organisation (WSCCO) with New Plymouth and South Taranaki district councils or keeping water services delivered in-house within Stratford District Council.

As part of this process the three Taranaki councils worked together to identify objectives for water services delivery that would meet our communities’ needs, and which model would be best suited to deliver those while also meeting Government requirements.

These community objectives are:

• Sustainably funded – having enough income to meet standards while remaining affordable
• Operationally efficient – keeping costs down
• Attractive for investment and growth - to keep the community and business strong
• Supportive of Te Mana o te Wai – taking care of water in the environment
• Well maintained and compliant with regulations
• Supported by a capable and resilient workforce
• Understanding of local needs and responding quickly

The Government also made it clear that it was expecting councils to work together to see if regional models would be suitable. With new legislation in place, each council chose which options were best to investigate for their district.

A Water Services Council Controlled Organisation (WSCCO) jointly owned by the three Taranaki district councils, is set up to deliver drinking water and wastewater services across the region. Stormwater service delivery remains with individual councils under this proposed regional model.

How it would work

Each council would be a shareholder in the new jointly owned organisation. They would create a committee to oversee the organisation. The make-up of the committee would include representatives of each council and iwi mana whenua. The committee would appoint a Board comprised of independent, professional directors, chosen for their skills and experience in relevant areas. The Board would be responsible for ensuring the organisation meets the expectations and levels of service set by the shareholders, as well as all legal and regulatory requirements. This means operational and investment decisions would sit with the WSCCO, rather than with elected members from each council.

Impact on the community

Pooling our resources gives us greater access to the finance, people and systems that will ensure our water services are safe and support communities and businesses. A regional approach will improve the ability to coordinate investment in infrastructure, take advantage of new national engineering standards and design solutions, and plan delivery more efficiently.

A larger number of consumers mean the organisation will have greater access to funding for investment or to meet unexpected events, and help to keep costs to individual consumers lower than the alternative. A larger customer base means the increasing costs of water infrastructure will be spread across a greater number of customers.

We recognise that some people, especially in smaller communities, may be concerned that ‘bigger isn’t always better’. However, it is important to remember that a water service organisation must meet national requirements for quality and service, and council requirements for current levels of service to our communities regardless of size.

Some communities and customers will continue to have different levels of service. For instance some customers are on restricted flow connections; others do not get wastewater services. The proposed model means that consumers will continue to pay for what they use, at a fair cost based on their level of service.

Check out the impact on levels of rates, debt and services here.

Water Services at a Regional Level

• 17 water supplies
• 12 wastewater schemes
• 2,773km of drinking water and wastewater pipes

The Joint WSCCO would provide water services to 79% of the region’s residents and wastewater services to 72%. This covers 45,899 water connections and 40,913 wastewater connections.

The water and wastewater services debt is expected to increase from $266 million to $429 million over the 10 years from 2024 to 2034.

• $1.2 billion is how much the existing regional assets are worth
• $2.1 billion is how much it would cost to replace these assets
• $75 million how much water and wastewater services cost each year to operate in Taranaki.

Key Investment required

All councils have a significant investment programme in renewals. Stratford and South Taranaki district councils have major wastewater treatment plant upgrades while New Plymouth District Council has a drinking water treatment plant upgrade, and improvements to Waitara and Inglewood drinking water networks.

A council business unit, dedicated to delivering water, wastewater and stormwater services across the district. Similar to what we do now, but with changes required to meet the Government’s new rules and regulations.

How it would work

Water services delivery would remain the responsibility of council. Under this model, any revenue we get, either through rates or other charges, for providing water service would be ring-fenced and used specifically to pay for the cost of delivering those water services, which is similar to what we do now.

We would prepare a water services strategy, setting out priorities and ensuring the business unit has the funding it needs. The business unit will prepare separate performance and financial reports for council.

Impact on the community

Keeping water and wastewater services inhouse is a viable option for us because it is financially sustainable in the long-term, and therefore meets the latest rules and regulations set by Government.

Our community would continue to receive compliant and reliable water services by a team who understand local issues. Elected members would continue to have direct influence on future decisions relating to water services for the Stratford district, and community members would be able to influence these decisions through annual and long term planning processes, just as they can do now.

We can still continue to work in collaboration with other Taranaki councils to gain efficiencies over time.

View the impact on levels of rates, debt and services here.

Ownership and Control

Governance and Accountability

Advantages and Disadvantages

Impact on Rates and Charges

Typical household in the Stratford District

This graph compares what a typical Stratford household (2.7 people) could expect to pay on average for drinking water and wastewater services between the SDC in-house business unit (SDC-IBU) model and the joint Taranaki model (SDC - Regional model) over 30 years. Stormwater is not included in this comparison graph.

*An important note about these numbers

When making projections about the future we have to make certain assumptions, which may or may not turn out to be accurate. The information used for making financial projections is based on things like past history, the experiences of others, efficiencies achieved through economies of scale and willingness to take on significant debt under a regional model, budgets and projects from our Councils’ Long-Term Plans, Asset Management Plans and 30-year infrastructure strategies. They also include the assumption of price harmonisation of water and wastewater services over 10 – 15 years. While the numbers may vary from what will actually happen, the graphs are useful for comparative purposes.

Standardising charges

Currently in the Stratford district there are a couple of ways properties pay for water supply. Most town (urban) properties pay a flat charge each year for water (called a water targeted rate), while rural and high users pay water supply by the amount they use (called volumetric charging) on top of the flat charge.

Under a regional model water and wastewater charges would be standardised (price harmonisation) over a period of 10-15 years. This means everyone in the service area will pay the same price for the same service, and the harmonisation will be gradual to avoid large price increases all at once.

Our water and wastewater charges are already standardised across the Stratford district, so under an in-house business unit price harmonisation will continue, and future charges would be determined by Council.

Forecasts of this kind of “price harmonisation” effect is shown in the Water and Wastewater Charges Harmonised graph below.

Drinking water and wastewater charges harmonised

Impact on Debt

One of the benefits that Local Water Done Well introduces is the ability for a separate water services entity to borrow more money based on its revenue, than a council can.

This is particularly helpful in a case where a council is at or near its borrowing limits. This isn’t the case for the three Taranaki districts, which all have sufficient borrowing capacity to meet forecast water infrastructure investment needs.

However, creating a WSCCO, and moving existing debt related to two waters off the council balance sheet, would improve each council’s ability to service its remaining debt (a bit like a smaller mortgage would leave more money in the household budget). Inherited, and any new debt, would now be carried and serviced by the WSCCO.

Numbers based on each council’s Long Term Plan, as at 30 June 2025 (rounded).

Impact on Levels of Service

The Government has repeatedly talked about the need for councils to work together to achieve scale in the delivery of water services and keep costs to consumers down. In general, it is more efficient, effective, and sustainable to deliver water services to a larger number of consumers than a smaller one. A regional WSCCO offers:

• Cost Efficiency: Larger organisations reduce per-user costs for infrastructure investment, maintenance, and compliance with regulatory standards. This is because costs are spread across a larger customer base.
• Shared Expertise: Pooling resources allows access to a broader range of technical expertise, skilled staff, and operational capabilities, improving service quality and driving innovation.
• Better Resilience: A larger-scale model provides greater capacity to respond to emergencies, manage risks, and adapt to future challenges like climate change.
• Improved Investment Capability: The bigger the entity, the greater the ability to access better funding, spread costs over a wider base, and invest in critical infrastructure upgrades.
• Better Regulatory Compliance: Scaling up enables more efficient implementation of increasing health, environmental, and economic regulations. This means a greater focus on securing good environmental outcomes through more resourcing for compliance monitoring including consent conditions, and increased ability to meet compliance standards.

By achieving greater scale, councils can deliver more sustainable, affordable, and high-quality water services for their communities.