First opportunity for formal engagement
The New Zealand Commerce Commission (NZCC), who already regulates other sectors such as telecommunications, energy transmission and distribution, and certain international airports under Part 4 of the Commerce Act 1986, has launched its public consultation on the first stage of economic regulation of water services in New Zealand through the publication of its Discussion Paper on the Economic Regulation of Water Services – Information Disclosure (Discussion Paper).
This consultation provides the first opportunity to give feedback as part of an "ongoing conversation" between the NZCC, councils, and other stakeholders about the development of the economic regulation of water services, which will begin with information disclosure (ID) regulation. The consultation seeks broad feedback in a range of areas - for example, what information would be most crucial to obtain from water services providers (WSPs), how the NZCC can keep the costs of regulation down, and the intended processes, timeframes, and assurance requirements.
This article explains the purpose of ID regulation in the context of the Government's Local Water Done Well reforms, the NZCC's statutory powers to establish an ID regime for water services, what type of information can be expected to be disclosed, and further information about the NZCC's immediate and long-term process.
What is the purpose of ID regulation?
ID regulation is intended to be the initial core form of economic regulation of water services under the new economic regulation framework for water. It is intended to build on the information gathered through the "Water Service Delivery Plans", which will set out how councils intend to deliver water services to their communities, and which are due to be submitted by councils to the Department of Internal Affairs by September 2025.
Regardless of how councils determine the way in which they will deliver water services to their communities, ID regulation intends to promote the long-term benefit of consumers by making suppliers share information about their performance and subjecting this information to scrutiny by the NZCC and wider stakeholders. The idea is that this transparency and scrutiny, together with the threat of further intervention, incentivises suppliers to achieve performance outcomes consistent with the statutory purpose. In that context, ID regulation will also assist the NZCC in evaluating whether additional regulatory measures are required because ID regulation alone is not effectively promoting the statutory purpose (other forms of economic regulation may be brought in at a later date, including revenue threshold, quality, performance requirement, and price-quality regulation).
"Foundational" versus "Enduring" ID regulation
Under the current drafting of the Local Government Water Services Bill (LGWS Bill), the NZCC must set "enduring" ID regulation requirements for local government water service suppliers within six months of the commencement of the LGWS Bill (at this stage, estimated by Q1 2026). This would apply to water supply and wastewater services only. Stormwater can be brought in at a later date via Order in Council.
However, the NZCC already has powers to determine "Foundational ID" under the previous Local Water Done Well legislation passed back in September of last year, the Local Government Water Services (Preliminary Arrangements) Act 2024 (WSPA Act). Foundational ID can apply to any territorial authority or CCO that delivers water supply, wastewater and/or stormwater services, except for Watercare. However, Foundational ID only applies to WSPs that are specified by way of Order in Council, which has not occurred to date.
The Discussion Paper is primarily seeking views on Foundational ID under the WSPA Act, but given that Foundational ID does not currently apply to any WSP and any future application of Foundational ID would only be in place for a short time, submissions can be expected to be used to inform enduring ID regulation under the LGWS Bill once enacted (enactment expected Q3 2025).
The table below provides further detail on how the different types of ID regulation will apply.
Which water services? |
Who does it apply to? |
When will it apply? |
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Foundational ID WSPA Act (Part 2, subpart 3)
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Could apply to water supply, wastewater, and stormwater if specified by Order in Council.
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Any "local government water service providers" specified by Order in Council made on the recommendation of the Minister for Local Government and the Minister of Commerce and Consumer Affairs (after advice form the NZCC and the DIA).
This could include:
NZCC is required to consult interested parties before making recommendation. Once an entity is specified by Order in Council, NZCC may make a determination setting out the ID requirements for those entities. |
The power to impose regulation has been in place since enactment of the WSPA Act in September 2024. To date, no Order in Council has been made specifying entities which would be subject to foundational ID.
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Enduring ID LGWS Bill
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Water supply and wastewater services automatically subject to ID regulation (no Order in Council required).
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Any "decision-making local government water services supplier", which is a local government water service supplier that makes decisions about:
This means that more than one provider could potentially be subject to ID for the same service (e.g. a parent council and a water organisation if they both meet the above definition). |
NZCC to make determination specifying how ID regulation will apply to decision-making local government water services suppliers who supply water and wastewater services. Enduring ID requirements must be specified within 6 months of the commencement of the LGWS Bill. |
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Stormwater services. NZCC could make recommendations to Minister to regulate stormwater via Order in Council. |
Could apply to any "local government water service provider" or "decision-making local government water services supplier" if specified via Order in Council. |
Regulation of stormwater could be brought in at a later date if necessary via Order in Council. |
What kind of information may be required to be disclosed?
ID regulation will involve the NZCC requiring WSPs to disclose (annually, or on an ongoing basis) certain information or data in a prescribed form. WSPs would have to provide the required information to the NZCC as well as making the information publicly available (with the exception of certain confidential or commercially sensitive information).
The Discussion Paper outlines the categories of information that the NZCC may require WSPs to provide, namely:
- Quality of service information – information and data in relation to customer satisfaction, availability of service, engagement methods, etc.
- Asset management information – asset information, performance information (eg water loss, mains bursts etc), asset management systems, long-term forecasts, capacity and utilisation, sustainability, risk, etc.
- General financial information – historical and projected financial statements, explanations of variances, asset values, profit figures, cashflow and other financing information, cost allocations, etc.
- Pricing and contractual information – prices and pricing methodologies, development contribution methodologies, customer contracts, related party transactions, etc.
Next steps
The NZCC is encouraging stakeholders to engage in its consultation process to help ensure that the new economic regulation framework for water services is as flexible, workable, and effective as possible.
Submissions on the Discussion Paper are due 4pm Wednesday 26 March 2025. The Discussion Paper, consultation feedback form, and accompanying technical working paper on the proposed accounting basis for the information reporting can be found here.
Our previous Insight on the Local Water Done Well framework, including a broader explanation of economic regulation, can be found here.
If you would like to discuss the proposed ID regulation, or have any other questions, please get in touch with one of our experts below.