Government announces plans for water services economic regulation

The economic regulation regime aims to promote investment in water services to give New Zealanders confidence we are on track to ensuring access to quality water services for decades to come.

Economic regulation will apply to all local government drinking water and wastewater services and the regime will provide flexibility to include stormwater services at a later date, if necessary.

The Commerce Commission will be given a range of tools to help ensure water services providers are collecting sufficient revenue, and making efficient investment decisions for maintaining and developing infrastructure so that water services meet regulatory requirements and are delivered at a quality that communities expect.

These tools are:

• information disclosure – all local government water services providers will be required to disclose information to promote transparency of their performance and inform the need for any further regulatory intervention
• revenue thresholds – the Commission will have new powers to set revenue thresholds to issue clear expectations about the revenue needed to maintain and develop water infrastructure
• financial ringfence – the Commission will be able to monitor and enforce the requirement that water services revenue is spent on water services alone
• quality standards and performance requirements – following approval by the Minister of Commerce and Consumer Affairs, the Commission will be able to set quality standards and require specific providers to take certain actions
• price-quality regulation – following approval by the Minister of Commerce and Consumer Affairs, the Commission will be able to set the maximum or minimum revenue levels that specific providers can collect.

Information disclosure requirements will give communities peace of mind that revenue collected through rates or water charges is being spent on water infrastructure and that this revenue is sufficient to fund the level of investment needed. These requirements will also allow the Commerce Commission to collect and analyse information relating to consumer protections, such as service quality and customer engagement. If information gathered reveals that issues exist, a further range of tools would be available to allow consumer protections to be strengthened.

The economic regulation regime will be progressed as part of the Local Water Done Well reforms to address New Zealand’s long-standing water infrastructure challenges while retaining local ownership and decision making.

The Commerce Commission will start implementing the economic regulation regime after legislation is passed, which is expected in mid-2025.

Read the Government's announcement(external link) — Beehive.govt.nz

Read more about water services economic regulation and consumer protection:

Economic regulation policy for water services

Read more about Local Water Done Well:

Water Services Policy and Legislation(external link) — Department of Internal Affairs