Repealed 3 Waters economic regulation and consumer protection regime

About the Water Services Reform Programme

The Water Services Reforms will shift water service delivery from 67 local authorities to 10 new publicly owned water services entities.

The government is committed to significantly improving the safety, quality, resilience, and performance of water services (drinking water, wastewater, and stormwater). The Water Services Reform Programme aims to ensure that water infrastructure and services are planned, maintained, and delivered so that these critical services are fit for purpose.

Economic regulation and consumer protection regime

Following public consultation in 2021, the government has passed legislation to introduce an economic regulation and consumer protection regime for the reformed water services sector. The regulatory regime will be overseen by the Commerce Commission. Economic regulation safeguards will focus on protecting consumers from problems that can occur when monopoly providers of essential goods and services do not face the usual market disciplines to keep prices low and quality high. For example, the regime will aim to drive efficient expenditure and pricing practices and provide greater transparency about the performance of the new water services entities.

The economic regulation provisions will require the water services entities to disclose certain information, directly govern service quality, and set a strong efficiency challenge to drive lower prices. The Commission will have the power to impose a price ceiling or revenue cap, allowing it to drive efficient expenditure and smooth any price shocks over time for the benefit of consumers. Further, the Commission is empowered to adapt the use of its regulatory tools to influence the different water entities and the various water services they provide.

Consumer protection safeguards will give consumers a strong voice on how water services are delivered and make water services entities accountable for delivering on community expectations. The Consumer Advocacy Council will increase its scope so that it can advocate on behalf of water services consumers and an independent dispute resolution scheme will be established to resolve disputes between consumer and water suppliers. The Commission will be required to set and enforce a service quality code by 1 July 2027 to improve the quality of water services. There is scope for the Commission to target the areas where consumer harm is most likely, or issues that consumers are most concerned about.

The Commission has been chosen to oversee this new economic regulation and consumer protection regime because it has a strong track record of implementing similar regimes in other utility sectors. The role of Water Services Commissioner will be incorporated into the Commission’s governance structure to reflect the unique nature of the water sector. They will be the principal spokesperson for the Commission’s functions in relation to the Water Services Economic Efficiency and Consumer Protection Act. They will also have the primary relationship at Commissioner level with stakeholders interested in the water services industry.

The regime will be funded via levies on regulated suppliers on behalf of consumers.

This regulatory regime will complement the wider Water Services Reform Programme by promoting consumer interests and ensuring the new system is efficient, effective and responsive.

Cabinet decisions and related papers

The government’s decisions on water services regulation are set out in the following documents:

Consultation

In October 2021, MBIE released a discussion document for consultation, seeking feedback on how an economic regulation and consumer protection regime for the Water Services Reforms should be designed. Consultation on the discussion document closed on 20 December 2021, and 53 submissions were received.

Water Services Reforms discussion document and submissions

The Finance and Expenditure Committee also considered public submissions during its consideration of the Bill. The Committee reported back to Parliament on 7 June 2023. You can read the submissions, advice and reports by visiting the Parliament website.

Water Services Economic Efficiency and Consumer Protection Bill(external link) — New Zealand Parliament Pāremata Aotearoa

Further information

In July 2020, the government launched the Water Services Reform Programme – a three-year programme to reform local government water services delivery arrangements. More information is available on the Department of Internal Affairs website.

About the Reform Programme(external link) — Department of Internal Affairs