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.

Local Water Done Well is being implemented in 3 stages:

1. Water Services Acts Repeal Act 2024 – This Act repealed the previous Government’s Water Services Entities Act 2022, Water Services Legislation Act 2023, and Water Services Economic Efficiency and Consumer Protection Act 2023.
2. Local Government (Water Services Preliminary Arrangements) Act 2024 – This Act establishes the preliminary arrangements for the new water services system, including transitional economic regulation.
3. Local Government (Water Services) Act 2025 and Local Government (Water Services) (Repeals and Amendments) Act 2025 – These Acts establish the enduring settings for the new water services system, including enduring economic regulation.

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

Water Services Policy and Legislation(external link)  — Department of Internal Affairs

Consultation on Commerce Commission levy for the economic regulation of water services

We recently consulted on a proposed levy to recover the cost of the Commerce Commission’s new functions to regulate water services from 1 July 2025 onwards.

The Commerce Commission will oversee and implement the new economic regulation and consumer protection regime for New Zealand’s water services and will have a range of regulatory tools, including mandatory information disclosure, to promote transparency and ensure investments are made where they are needed most.

The proposed levy has been designed to recover the cost of the regime, excluding litigation and Crown Monitor costs for Watercare. The Local Government (Water Services) (Repeals and Amendments) Act 2025 enables the levy making power in the Commerce Act to be applied to regulated water services suppliers. This would require regulated water services suppliers to pay the levy determined in accordance with regulations. The Ministry of Business, Innovation and Employment would administer the levy on behalf of the Minister of Commerce and Consumer Affairs.

The next step is for the Government to make decisions on a levy design, with the aim of levy regulations coming into effect as soon as possible. The levy power enables costs to be recovered from 1 July 2025 even if the levy regulations come into effect after this date.

To read the discussion document, visit our consultation page.

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

Transitional economic regulation

The Local Government (Water Services Preliminary Arrangements) Act 2024 requires councils to develop Water Services Delivery Plans setting out baseline information, including capital and operating expenditure, financial projections, and asset information. This information will be shared with the Commerce Commission as it implements the enduring economic regulation regime.

The Act also enables some councils and council-controlled organisations to be subject to an early form of information disclosure by the Commerce Commission, to promote transparency prior to the enduring regime coming into effect.

In March 2025, the Government announced its decision that Wellington Water will be subject to this early form of information disclosure following reports highlighting significant concerns with its performance. Wellington Water will begin disclosing information from the end of October 2025 and the Commerce Commission will monitor and report on this information.

Local Government (Water Services Preliminary Arrangements) Act 2024(external link) — New Zealand Legislation

Economic Regulation of Water Services – Foundational Information Disclosure for Wellington Water(external link) — Commerce Commission

Enduring economic regulation

The Local Government (Water Services) (Repeals and Amendments) Act 2025 inserts an enduring economic regulation regime into the Commerce Act. The regime will promote sufficient revenue recovery, and efficient investment and maintenance so that water services are delivered at a quality that communities expect. It initially applies to water supply and wastewater services, with flexibility to include stormwater services at a later date, if necessary.

Information disclosure is at the core of the new regime. All regulated suppliers will be required to disclose information to promote transparency about their performance and inform the need for any further regulatory intervention. In addition, the Commerce Commission will be 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 for specific suppliers. 

New information disclosure requirements will allow the Commerce Commission to collect and analyse information relating to consumer protections, such as service quality and customer engagement. A range of tools can be used to address any issues that are identified, including regulations relating to complaints processes and a Commerce Commission service quality code, if needed.

Local Government (Water Services) (Repeals and Amendments) Act 2025(external link) — New Zealand Legislation

Overview of economic regulation and consumer protection [PDF 273 KB](external link) — Department of Internal Affairs

Cabinet decisions and related papers

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

Proactive releases(external link) — Department of Internal Affairs

Further information

In December 2023, the Government announced Local Water Done Well, a new direction for water services and policy. More information is available on the Department of Internal Affairs website.

Water Services Policy and Legislation(external link) — Department of Internal Affairs 

The Commerce Commission is responsible for implementing the water services economic regulation regime. More information about the Commission’s role is available here:

Water – Wai(external link) — Commerce Commission

Previous water services policy and content

Information about the previous Government’s water services policy and legislation is accessible here:

Archived Water Services Reform Programme information(external link) — Department of Internal Affairs

Archived Water Services Economic Efficiency and Consumer Protection Act 2023