What’s happening? | He aha te mea e puta ana?

Economic regulation

The intended regime will support water infrastructure to be appropriately invested in, maintained and delivered for the long-term benefit of Kiwi consumers. We’ll do this by promoting sufficient revenue recovery, and efficient investment and maintenance over time so that water services meet regulatory requirements and are delivered at a quality communities expect.

We intend to design a regime that is flexible and proportionate, in line with councils’ different needs and situations. This will provide the clarity and stability water service providers need to make the best investment decisions. The foundational tools to help achieve this, as indicated by the Government, are likely to be information disclosure and the setting of revenue thresholds, as and where appropriate. Additional tools may be made available by the Government where there is a demonstrated benefit.

When making recommendations, determinations, or other decisions, we will take into account other obligations on water service providers. This includes local government obligations with respect to iwi/Māori, including existing Te Tiriti and Treaty settlements.

Economic regulation of water services, along with other recently announced enduring settings for New Zealand’s water services sector, will be implemented through the Local Government Water Services Bill. The Government intends to introduce this legislation in December this year and pass it by mid-2025, at which point we will begin to implement the full regime.

In the meantime, the Local Government (Water Services Preliminary Arrangements) Act 2024 enables some water service providers to be subject to an early form of information disclosure by the Commission. While this foundational information disclosure is unlikely to apply to all providers, we will have the ability to consult broadly under the transitional regime.

Q&A on economic regulation

What is the Commission working on right now?

The Government has indicated the Commerce Commission will be the economic regulator for the Government’s Local Water Done Well (LWDW) regime. We are currently awaiting the Local Government Water Services (LGWS) Bill that will implement the full system. See more details on the Government’s announcement .

In the meantime, the Local Government (Water Services Preliminary Arrangements) Act 2024 enables specified entities to be subject to an early form of information disclosure by the Commission (‘foundational information disclosure’), prior to the full economic regulation regime.

As part of this, we will be talking to stakeholders early next year to start shaping up the foundational information disclosure regime. We’ll be asking for stakeholders’ views on a range of topics to support us in developing foundational information disclosure requirements, with a view to the longer-term information disclosure regime.

We’re also taking part in webinars and meetings hosted by Local Government New Zealand and Water New Zealand in November, so we can connect directly with some of our stakeholders. This is an opportunity for us to share our vision for the economic regulation of water and hear your concerns and feedback to help inform the development of the regime.

Are you regulating stormwater as well?

The Government has decided that the economic regulation regime will apply to drinking water and wastewater services and will provide flexibility to include stormwater services at a later date, if necessary. See Department of Internal Affairs’ website for more information.

How do I get ready for the Commission to set a Price-Quality Path?

We intend to create a regime that is flexible and proportionate, in line with councils’ different needs and situations and Government policy.  This will provide the clarity and stability water service providers need to make the best investment decisions.  In a nutshell, it’s about having the right tools, for the right problems, available at the right time so that the long term interests of consumers are met.

The Commission will first be focusing on information disclosure (ID) to require water services providers to publish robust information on planning, investment, and performance. We expect to set initial ID requirements around six months after the commencement of the Local Government Water Services Bill. Stakeholder insights will be critical to the success of this regime so we will be actively engaging to help ensure good outcomes for our communities.

A transitional economic regulatory regime for Watercare is provided in the Local Government (Water Services Preliminary Arrangements) Act 2024. This allows the Department of Internal Affairs Secretary to set a price-quality path for Watercare under a tailored Charter.

For all other water services providers, the Ministry of Business Innovation and Employment’s timelines indicate that other regulatory tools including quality standards, performance requirements, and price-quality regulation will not be applied until at least 2026. See Department of Internal Affairs’ website for more information on the timelines for each economic regulation tool.

ID will apply to all drinking and wastewater service providers. However, the other regulatory tools may not be needed for all providers. Legislation is expected to provide a regulation making power that enables the Minister of Commerce and Consumer Affairs to make the additional tools available to the Commission, if they are required.  The tools could apply to one or more water service providers.

How will the Commerce Commission keep prices affordable for consumers?

Our fundamental role is to promote consumers’ interests over the long-term and to help ensure they get value for money for the services they receive. The regime will give New Zealanders peace of mind that revenue being recovered is being efficiently invested so that core drinking and wastewater infrastructure is delivered at a quality communities expect.

How is the information the Commission is requesting different to what other regulators are requesting?

We know there are areas of common interest between the Water Services Authority – Taumata Arowai and the Commerce Commission and that there are opportunities to coordinate and align our respective activities. We have a strong working relationship with them, backed by a Memorandum of Understanding and a joint work programme.

We are also conscious that there are other key parties collecting and reviewing council information including the Department of Internal Affairs, the Office of the Auditor General and Regional Councils.

A key focus for us is to ensure we minimise unnecessary duplication of reporting from suppliers and maximise opportunities to share information across the system insofar as the law allows.

Do you have a question for us?

Please send them through to wai@comcom.govt.nz, or let us know if you want to be included in our mailing list.

Crown monitor role

In September 2024, the Government appointed the Commerce Commission as the Crown monitor for the interim regulation of Watercare, until full economic regulation of water services is established. The role of the Crown monitor is to monitor and report on Watercare’s performance against the Watercare charter, which will be set by the Department of Internal Affairs (DIA).

What will we do? | He aha ta tātau e mahi ai?

We are an independent regulator, but we recognise we cannot effectively develop and implement economic regulation for water without working collaboratively with other stakeholders. We are committed to ensuring a high level of transparency and acknowledge the importance of a regulatory regime that is well understood by a diverse range of stakeholders.

We will keep the sector and interested stakeholders informed and encourage all to contribute and engage with us as we develop and implement an economic and consumer protection regulatory regime. This will help ensure the regime provides certainty, is understandable and reflects the needs of the many communities across Aotearoa New Zealand.

Who we’re working with | Ngā Tari e tū tahi ana

In developing our regime, we’re working closely with our fellow regulator, the Water Services Authority - Taumata Arowai and with Government agencies like the Ministry of Business, Innovation and Employment (MBIE), and the DIA.

What’s next? | He aha te mea panuku?

Over the coming months we will publish more information about our mahi, key documents, consultation dates and opportunities for engagement. If you would like to be added to our mailing list, please email us at wai@comcom.govt.nz.

Work with us | Me mahi tahi tātou

We’re building our Water team to ensure we have the expertise in-house to deliver on our remit. Keep an eye out on our careers page for the latest job listings.