Frequently asked questions

While Council goes through this process, we will continue to deliver water services (drinking, waste, storm) as we do currently while we explore the best service delivery model under the LWDW model.

Our focus is on ensuring our communities receive quality and value in water services delivery now and in the future.

Under the new rules however costs are expected to increase for end-users. In addition to general inflation government is introducing new quality standard for wastewater in mid-2025 and storm water and we expect there to be increased compliance costs with the rules we must meet for taking water and discharging wastewater.

Keep yourself informed on Council’s progress as we consider the various water services delivery options.

Iwi/hapū have been invited to workshops at a council and regional level so should be able to provide insight into LWDW and how it will affect them.

Most importantly ensure you have your say on the proposed Water Services Delivery Model options when Council consults on this in early 2025 (April - May).

Councils need to meet several important deadlines under the LWDW framework to ensure a smooth transition to the new water management approach. Key decision dates include:

1. Water Service Delivery Selection: (by December 2024) Councils must decide whether they will join an existing water service entity, form new regional partnerships, or continue to manage services independently under the LWDW framework.
2. Community Consultation: (April - May 2025) Council must consult with their community on two water services delivery options. These are likely to be the status-quo (our current delivery model as per our Long-Term Plan) and, an alternative which is probably a council-controlled organisation (CCO) owned by the council and one or more of our neighbouring councils.
3. Water Services Delivery Plan (WSDP) Adoption and Submission: (June – September 2025) Councils are required to adopt their WSDP and submit to the Minister for approval, outlining how they will meet new water service delivery requirements before September 2025.
4. WSDP Acceptance by Minister: (October 2025) It is expected that the Minister will confirm around October 2025 if our WSDP meets all statutory and other requirements.
5. WSDP Implementation: (November 2025 on) If accepted implementation of the WSDP is expected to commence around November 2025. Full implementation is expected to take 12-18 months.
6. Long-Term Plan Updates: (by June 2026): Councils need to reflect changes in their Long-Term Plans (LTPs), incorporating new water service delivery models, funding mechanisms, and service expectations.
7. Compliance with New Water Standards: (by January 2027) All councils must ensure that their water services comply with the updated national regulatory standards for drinking water, wastewater, and storm water management by this date.
8. Financial Sustainability: (June 2028) Council must provide an explanation of how it proposes to ensure that the delivery of water services will be financially sustainable by June 2028. Financial sustainability means water services revenue is sufficient to meet the costs of delivering water services. The costs of delivering water services include meeting all regulatory standards, and long-term investment in water services. How councils’ approach achieving financial sustainability can be different depending on local circumstances and require councils to consider the balance between three key factors. These factors are:

• Revenue sufficiency – is there sufficient revenue to cover the costs (including servicing debt) of water services delivery?
• Investment sufficiency – is the projected level of investment sufficient to meet levels of Financing Sufficiency?
• Financing sufficiency – are funding and finance arrangements sufficient to meet investment requirements?

LWDW requires Council to develop a 'one-off' Water Services Delivery Plan (WSDP) by 3 September 2025 outlining future water services delivery arrangements.

• WSDP must include detailed information about water services operations, assets, revenue, expenditure, pricing, future capital expenditure, and how we plan to finance and deliver our preferred delivery model.
• WSDP can be for drinking and wastewater only and can exclude storm water. If storm water is excluded from a joint-WSDP then the plan must set out how each council in the joint plan will deliver storm water. Whatever a council chooses, they will remain responsible for storm water. This includes setting the level of service and rating for storm water (whereas the responsibilities and obligations for drinking and wastewater would transfer to the entity delivering them).
• WSDP are for a minimum ten-year timeframe but can be up to 30-years. The first three-years must be in detail.
• WSDP must demonstrate how they will be financially sustainable by June 2028. Financial sustainability means water services revenue is sufficient to meet the costs of delivering water services.
• WSDP must be signed-off by the Chief Executive and accepted by the Minister.
• WSDP must provide a summary how our water services model can ensure water services will be delivered in a financially stable manner by 30 June 2028.

Council must provide an explanation of how it proposes ensure that the delivery of water services will be financially sustainable by June 2028.

Financial sustainability means water services revenue is sufficient to meet the costs of delivering water services. The costs of delivering water services include meeting all regulatory standards, and long-term investment in water services.

How councils’ approach achieving financial sustainability can be different depending on local circumstances and require councils to consider the balance between three key factors. These factors are:

• Revenue sufficiency – is there sufficient revenue to cover the costs (including servicing debt) of water services delivery?
• Investment sufficiency – is the projected level of investment sufficient to meet levels of financial sufficiency?
• Financing sufficiency – are funding and finance arrangements sufficient to meet investment requirements?

The Department of Internal Affairs (DIA) states that Local Water Done Well has been designed to enable water services to be delivered in a financially sustainable manner, while ensuring water charges are affordable for consumers i.e. financial sustainability includes affordability.

In their advice they state that the structural and financing options available under Local Water Done Well have been designed to enable councils to evaluate the impact of different service delivery models on the affordability of water charges for consumers.

When considering the three factors involved in achieving financial sustainability (revenue sufficiency, investment sufficiency and financing sufficiency), councils are advised to keep affordability of water charges front-of-mind.

The affordability of water charges will be a function of revenue requirements, which in turn will be determined by the projected operating costs of service and the proposed levels of investment and service. DIA states that the way these factors interact, and the choices councils’ make around delivery models and financing to deliver benefits for consumers, should be determined at a local level.

Note:

• Despite the statements made by DIA on affordability Council has questions on how water investment needs will be balanced against the ability of our ratepayers to pay given our high areas of deprivation.
• New regulations will increase costs for end-users, regardless of whether Ruapehu goes it alone or partners with others.
• In the DIA briefings Council asked: How will small councils help their poorer populations with the greater costs from LWDW? DIA offered to talk directly with Council on this which is still to occur.

Ōtorohanga District Council is committed to working with iwi/hāpu as a valued partner.

The LWDW model allows for iwi participation in governance but does not mandate co-governance of water entities, as was the case in the previous government's Affordable Waters model.

A number of workshops have been organised with Council, both locally and regionally for iwi/hapū to contribute to the discussions.

Government is proposing changes that aim to lower the cost and burden of delivering water infrastructure. These include:

• Adjustments to the regulatory regime to reduce compliance costs, especially for small, low-risk drinking water suppliers.
• Introduction of mandatory national engineering design standards for water services infrastructure to streamline processes.
• A new stormwater management framework offering flexibility in how stormwater services are managed.
• Councils can contract or transfer services, such as maintenance, operations, and technical advice, to new water services organisations to leverage their capacity.
• The Water Services Authority - Taumata Arowai will set new rules for wastewater and storm water in-line with drinking water standards. This is likely to mean higher compliance costs. There is expected to be increasing importance placed on compliance.

The boards of water organisations will need to be comprised of independent and professional directors. Where consumer trusts are involved, the water consumers will elect trustees to the consumer trust (similar to local body elections) who in turn play a role in appointing the board of the water organisation and monitoring performance.

Council’s influence over future delivery and charges for water services and the involvement of iwi/hapū needs to be discussed by Council and agreed with any partner organisations.

A new economic regulator as part of the Commerce Commission is being established. The focus of the economic regulator is on investment and pricing (similar to regulation of the electricity market).

• The Commerce Commission will oversee the economic regulation of water entities. The Commission will have a range of regulatory tools to promote efficient practices and protections for consumers.
• The economic regulation regime will apply to drinking water and wastewater services and will provide flexibility to include storm water services later if necessary.
• The economic regulator will monitor water services providers so that water services are invested in, maintained, and delivered at a quality that communities expect. This includes setting rules for investment and pricing with costs to meet reporting and auditing requirements passed on.
• The Minister will be able to appoint a Crown facilitator – water services, and/or Water Services Commissioners, if problems (or potential problems) arise in councils or water organisations.
• Water services providers will be subject to a new planning and accountability framework, including a requirement for a water services strategy and annual reporting, and be required to have a statement of expectations.

Water CCOs will be able to utilise debt from the Local Government Funding Agency (LGFA), if they are financially supported by their parent council or councils. Under the new plan, water CCOs will be able to leverage up to a level equivalent to 500 per cent of operating revenues subject to meeting prudent credit criteria.

• The LGFA is the lowest cost provider of financing to local government and is already utilised by Council. Note: While the LWDW model opens-up borrowing capacity Council is still concerned over affordability issues with our ratepayer base.
• Mixed council/consumer trust owned water organisations and wholly consumer trust owned water organisations will be financially independent from councils. This means borrowing will be independent of local authorities (for example from banks or capital markets) and subject to the water organisation achieving sufficient credit quality and track record.
• Water organisations will be able to assess, set and collect water services charges from consumers and will be able to use the development contributions regime in the Local Government Act 2002 to charge developers where additional demand or growth is created.
• The LWDW legislation does not specifically embed price harmonisation e.g. where every water user within a regional CCO would pay the same to ensure affordability.

A key feature of the previous Labour government's 'Affordable Water' model was that all council water debt would transfer to the large regional entity that the council was to be part of. The intention was to remove this debt from the council's books and create financial headroom.

Under the new LWDW model the decision on existing water debt will be a decision for councils to take as they consider their options. Legislation provides a range of models and options to consider for WSDPs. DIA emphasiszed that councils must understand their financial position before deciding on a joint plan.

If a council decides to maintain the status-quo (go it alone) their existing water debt will remain on the council's books. In any other scenario the debt will transfer to the new water services entity. Under all options water users continue to underwrite the debt.

Neither the previous Labour government's 'Affordable Water' model or the current government's LWDW has preserved price harmonisation in their model.

The Department of Internal Affairs (DIA) suggests price harmonisation could happen over time with a staged implementation to mitigate some of the (political) risk.

The Mayoral Forum agreed the following appraisal criteria for any regional approach which were considered as part of the project:

• Be compliant with new legislative requirements that arises from Local Water Done Well policy
• Retain local voice and enable the differences in the requirements between coastal and inland communities in how they must manage wastewater, stormwater and coastal erosion to be balanced
• Be financially sustainable – can generate enough revenue (through charges and borrowing) to pay for itself;, i.e., Not dependent on additional funding from parent councils
• Provide meaningful opportunities to understand Iwi perspectives
• Be affordable for rate payers / users
• Genuinely change how services are delivered for the better

Councils will retain legal responsibility and control of storm water services but will have flexibility to choose the arrangements that best suit their circumstances. WSDP can be for drinking and wastewater only and can exclude storm water.

Each council is currently appraising how it would like to deal with storm water (inside or outside any joint arrangements) and this will feed back into the development of any Joint WSDP and Implementation Plan. 

Any Joint WSDP must explain how all the councils are going to deal with storm water. If storm water is excluded from a joint-WSDP then the plan must set out how each council in the joint plan will deliver storm water.

Whatever a council chooses, they will remain responsible for storm water. This includes setting the level of service and rating for storm water (whereas the responsibilities and obligations for drinking and wastewater would transfer to the entity delivering them). The intention of this approach is to ensure that the storm water needs of other council departments such as roading and parks can be supported.

The Government is committed to upholding Treaty of Waitangi settlements. Regardless of the future water service delivery arrangements councils choose to use, existing responsibilities, commitments and obligations between iwi/Māori and the Crown under the Local Government Act 2002, and under Treaty settlement legislation will continue to apply.

This includes existing requirements for iwi/Māori to fully participate in local government decision-making processes. The Department of Internal Affairs will engage with relevant iwi where their Treaty settlement legislation may be affected by the Government’s legislation proposals.

The Minister has the power to appoint a Crown Facilitator and/or Water Services Specialist if a council or group of councils, are failing in delivering or implementation of a WSDP. A council can also request the appintment of a Crown Facilitator and/or Water Services Specialist.

• The Crown facilitator would oversee the development of a WSDP including assuring compliance with the relevant legislation.
• The Water Services Specialist ensures a WSDP is compliant with water quality standards.
• Costs for a Crown Facilitator and Water Services Specialist are recovered from the respective council(s).

The Government is proposing changes relating to the wastewater environmental performance standards that are being developed by the Water Services Authority – Taumata Arowai.

The legislation will be amended so there will be a single standard, rather than a minimum or maximum. It will remove the requirement for the Water Services Authority – Taumata Arowai to give effect to Te Mana o te Wai.

Interim amendments to the Water Services Act will mean the Te Mana o te Wai hierarchy of obligations in the National Policy Statement for Freshwater Management (NPS-FM) will not apply when the Water Services Authority – Taumata Arowai sets wastewater standards.

These amendments would be designed to ensure regional councils implement a single standard approach in resource consents and cannot exceed the standard in consenting conditions apart from on an ‘exceptions’ basis.

The government's intention is to replace the NPS-FM to rebalance Te Mana o te Wai, to better reflect the interests of all water users. This does not mean that the environmental requirements for discharges to freshwater or coastal water will be lower – but it will enable a consistent approach for consenting the discharge of wastewater from treatment plants.