Supply and demands

As water bills hit letterboxes under the new Auckland Council system, Edward Rooney exposes a monstrous hidden cost that lurks in the near future.
How does another 3 per cent rise in water bills sound - on top of the rate of inflation - over the next few years?
Jean Berry's last water charges on November 25 last year arrived in her Swanson letterbox in two parts. The first was at a rate of $1.65 per 1000 litres and the second at $1.736. Her last Waitakere City Council rates, issued on May 24, 2010, had one rate at $1.61 per unit only.
"The charges have most definitely increased without any notification or explanation as to the two-tier charging, either," she says. She notes that the bill states it covers water and wastewater charges, which only stuns her further. "What wastewater? We don't have wastewater here, we're in the foothills."
Over in Piha, Leanne* describes the rise in even simpler terms. "I used to pay $16 per month for my water and would be near enough on target, $5 to $10 either way, when the bill came out. This time I owe nearly 200 buckaroos. I doubt it is because the meter wasn't read."
Auckland Council's accountability and performance committee chairman, Richard Northey, says water bills are just like other rates as the new council merges structures into one administration. "There will be some winners and some losers," he says.
It appears, however, everyone will be losers by the middle of next year when the council-controlled organisation in charge of fluid incomings and outgoings builds a $622 million sewage system beneath the middle of the Auckland isthmus called the "Central Interceptor (see panel)".
Watercare has statutory independence and can ultimately take what it believes to be the necessary action. "In the end, they can decide," he says.
But Mr Northey says Watercare has already shown a positive approach and expressed a will to consult.
"Through efficiencies, they have been able to reduce the water supply price to $1.30 [per 1000 litres of water]. That has also been done through not going ahead with some stormwater/wastewater separation projects, particularly around the old Auckland City area.
"Watercare believes the Central Interceptor will achieve that, as well as some environmental advantages."
Mr Northey's committee was formed to keep an eye on council-controlled organisations and Watercare, and has been briefed on the Central Interceptor scheme, but has further questions about it. "There will be some interesting debate late this year around wastewater charges."
Mr Northey says Watercare has assured Auckland Council it can continue to charge $1.30 per 1000 litres, plus inflation, for the next five years. However, the construction of the Central Interceptor "would result in an increase in the price of water above the rate of inflation".
One aspect of the debate to come will be whether the cost of a wastewater project should be included in the general water bill. Some previous councils separated the charges for water from wastewater, but Mr Northey says, "they come in the same bill".
Waitakere, North Shore, Rodney and Franklin included wastewater billing with land rate bills, whereas Metrowater charged on a volumetric basis. Manukau Water charged a fixed annual amount for residential customers and a volumetric charge for commercial and industrial customers.
Mr Northey concedes the $622 million scheme will have only one effect on each household's bill: "Once they get started on the Central Interceptor project, it would go up."
Mr Northey says Watercare anticipates the Central Interceptor project could add up to 3 per cent to bills per year and "it may mean we have to slow down other projects to offset that". He says more user charges could also be options.
Local Government Minister Rodney Hide boasted in a NZ Herald column in September last year: "We know the price of water is going to tumble. From the first of July next year everyone in the current Auckland, Waitakere, Manukau, North Shore and the Orewa/Whangaparaoa area of Rodney District will pay less. Many, significantly less.
"Everyone will pay the same tariff, $1.30 including GST, for 1000 litres of water. These are massive savings and positive proof that the decision to amalgamate all the existing council water entities into Watercare, as the sole supplier, was a wise and justified call.
"Water pricing should not be used, as it has been, to disguise rate hikes. Watercare is required by law to be a low-cost provider that cannot return dividends or surpluses to its shareholder."
Mr Hide carefully couched his words around wastewater, however, noting only that charges in this area are "not scheduled" to change before the middle of next year.
"That restriction will also apply to wastewater charges that are not scheduled to change until July 1, 2012, once the new Auckland council has studied the many and diverse charging regimes that exist today."
At the latest briefing of Mr Northey's council committee, Watercare concluded with the phrase: "Anything can be achieved, but there will be a cost."
* Leanne's name changed by request - Editor
What is the Central Interceptor? 
The proposed Central Interceptor is a large wastewater pipeline intended to improve the waste-water network service to parts of West and Central Auckland. It will replace 7km of pipeline from Hillsborough through Mt Roskill, Mt Albert, St Lukes, Western Springs and Grey Lynn.
At the moment, wastewater from West and Central Auckland goes through the western bays and central city, through a new pipe under Hobson Bay and  the eastern suburbs to Mangere. The interceptor will divert wastewater flows directly to the Mangere or Rosedale treatment plants, depending on which has the greater capacity.