Economic regulation of water services

About Local Water Done Well

Local Water Done Well is the Government's plan to address New Zealand's long-standing water infrastructure challenges.

It recognises the importance of local decision-making and flexibility for communities and councils to determine how their water services will be delivered in the future.

Key components of Local Water Done Well include:

• Fit-for-purpose water services delivery models, financing tools, infrastructure management requirements, legislation and standards.
• Effective and appropriate central oversight of water services with:
  • economic regulation by the Commerce Commission; and
  • water services quality regulation by the Water Services Authority – Taumata Arowai.

Further information about Local Water Done Well, including guidance and information for councils, is available on the MCERT website.

Water services(external link) — Ministry for Cities, Environment, Regions and Transport

Economic regulation

The Commerce Commission is implementing the economic regulation and consumer protection regime for local government water services.

It has a range of regulatory tools to promote sufficient revenue recovery, and efficient investment and maintenance so that water services are delivered at a quality that communities expect. The regime initially applies to water supply and wastewater services, with flexibility to include stormwater services at a later date, if necessary.

All regulated suppliers are subject to mandatory information disclosure requirements. In addition, the Commerce Commission is able to ring-fence specific amounts of revenue for water services investment, and set revenue thresholds so that suppliers have a clear understanding about the level of revenue they need to collect and invest in water infrastructure.

The Minister of Commerce and Consumer Affairs can also recommend regulations to give the Commerce Commission quality regulation, performance requirement regulation and price-quality regulation as additional tools if needed.

Additional tools are currently available for specific suppliers:

• Watercare, Auckland’s water supply and wastewater provider, will be subject to a price-quality path from 1 July 2028.
• Tiaki Wai, the new entity responsible for delivering water services in the Wellington metropolitan area, is subject to performance requirement regulation for the next 10 years.

Further information is available on the Commerce Commission website.

Water-Wai(external link) — Commerce Commission

Commerce Commission levy

The costs associated with the economic regulation regime are recovered from regulated water services suppliers.

Following consultation undertaken from November 2024 to February 2025, Cabinet agreed to maintain the overall levy structure and design consistent with what was consulted on, which includes:

• 100% levy recovery (excluding the Commission’s costs of litigation and Crown Monitor costs for Watercare).
• Recovery of the Commission’s costs for classes of activity to apply to the regulated suppliers to which the activity relates.
• Apportionment of the costs based on population in each regulated supplier district.

MBIE administers the levy on behalf of the Minister of Commerce and Consumer Affairs.

The 2024 discussion document and submissions received can be found here:

Have your say: Seeking feedback on a proposed levy to recover Commerce Commission costs of regulating water services

Submissions received on a proposed levy to recover Commerce Commission costs of regulating water services

Cabinet decisions and related papers

You can read the Government’s decisions on the establishment of the water services economic regulation regime on the Department of Internal Affairs website.

Proactive releases(external link) — Department of Internal Affairs

The following papers relate to decisions taken to impose performance requirement regulation on Tiaki Wai.

The following papers relate to decisions taken on the Commerce Commission levy for the economic regulation of water services.