Discussion Paper Three
Preamble
The discussion on the restructure of Hamilton City Water infrastructure is not about introducing water meters but about protecting our water supply from a commercial operator and the cost to the rate payers of Hamilton that that would create in ongoing water charges being set at a commercial return on assets, formula. This could happen whether the company was wholly owned by council or sold off to a private company.
Meters are going to be introduced. It is only a matter of when. The reason for this conclusion is:
1. Refer to the paper articles in the appendix. Government agencies are looking at options to create water companies around New Zealand using the Auckland and Christchurch models.
2. The ongoing cost to unmetered water is getting beyond what Hamilton City can financially sustain. Tauranga City saved 80 million dollars in the first ten years of metering their water.
3. Kapiti Coast District Council is introducing water meters despite an 8,000 signed petition for a referendum on the subject. Check their site: http://tinyurl.com/qawjf7j
4. All new houses being built in Hamilton have water meters installed.
5. Hamilton City Council is scoping out the introduction of meters. Refer to the news paper article in the appendix.
The objective:
1. To save the city millions of dollars by delaying infrastructure expansion costs
2. To introduce an environmentally sustainable water-supply policy for Hamilton.
Is it better for Hamilton to set our own agenda to manage water, or leave it to central government to impose it at a later date that would be on government terms?
Water volume is used to measure the cost for water reticulation, its treatment and the disposal of grey (waste) water. This is currently being charged through the rating system for domestic users and through meters for commercial users.
Hamilton could lead the way in innovation
City Water Ltd
One of the main issues when introducing user-pays to a metering water system is the mistrust rate payers have (and rightly so) that council will now, or some time in the future, sell off the
water department to private enterprise. Town water supply should always remain in public control because of the monopolistic nature of the infrastructure.
The other concern is that people lose the freedom to use water as and when they wish without incurring extra costs.
It is proposed, in this green paper, that both these concerns can successfully be mitigated.
City Water Trust
A good business model to use for water supply is the WEL Energy Trust model. It is proposed that a water supply company is set up and is owned by the water users of Hamilton and controlled on their behalf by a trust. Part of the trust’s mandate would be to:
1. Promote water use reduction
2. Subsidise alternative household water storage purchase and installation
3. Run a subsidised service department that would service household taps and toilet cisterns.
Surplus profits would be returned to the householders along the same lines as the WEL Energy Trust.
Stage two
The introduction of water meters
· The reduction achieved in water demand and grey water processing will mean savings of millions of dollars by delaying infrastructure expansion cost in Hamilton City. HCC has budgeted $45.9 million over the next 10 years for infrastructure expansion and maintenance
- Less water going into homes means less grey water coming out, which will generate more savings
- The council is legally required to ensure water is used sustainably. There are limits on how much water can be taken from the Waikato River. As demand increases, management of the resource becomes more crucial
- Paying for what we use will see a reduction in water demand. (Note: After meters were installed in Tauranga there was a drop in consumption of around 27 per cent).
Stage three
With water meters installed and the Trust business model in place, stage three could now be considered.
It is proposed that all new houses built in Hamilton install an underground (or above ground) rain water tank to feed the toilets, laundry and outside taps.
There could be a formula for the size of tank that would take into account the number of bedrooms each house has.
A trickle water supply system would be installed into the rainwater tank so that when the water level dropped to a pre-determined level it would topped up to ensure the household never ran out of water.
This would add initial installation costs to the house build, but there would be ongoing
long-term savings for the household in significant reduction in water charges. This would probably have a flow-on effect that would see an increase in the resale value of these properties.
Appendix
Summary paper for Water Metering – The Tauranga journey
· Tauranga has been metering their domestic water for 10 years
· Installation cost was approximately $250 per water meter
· Annual meter reading, billing and renewal cost is $18.96 per meter per year
· There is a 37% reduction in water use during peak demand with an average overall reduction of 25%
· Since the introduction of water meters, there has been no requirement for restrictions even with a population increase of about 27% during this period. Restrictions were also found to have limited impact and were not considered a sustainable solution
· Coupled with the reduction in water demand, there was a corresponding reduction in wastewater (grey water) volumes generated
· The reduction in peak and average water usage deferred the need to expand the infrastructure, saving $80million in the first ten years and averaging out to $4.7 million per year over a 30 year period.
· The average domestic annual water bill is $280.20
· One of the major management considerations when introducing water meters is to address misconceptions and propaganda challenges as and when they arise – letting them linger will derail and delay the process
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