Marsden Point Oil Refinery will stop refining oil next month, leading to a big loss in water rates income for Whangārei District Council
Marsden Point Oil Refinery will stop refining oil next month, leading to a big loss in water rates income for Whangārei District Council
Whangārei ratepayers are likely to foot the bill for more than $25 million of lost water income over the next decade due to Marsden Point Oil Refinery's closure.
The loss is a double whammy for Whangārei as the district is expected to face costs of $905,000 in the coming financial year.
The steep expense is to meet tough new Government requirements for Three Waters' drinking water, wastewater and stormwater national revamp.
Whangārei District Council general manager corporate Alan Adcock said the income loss for Marsden Point Oil Refinery water use was "massive" for the council.
Adcock said the refinery was a water super-user with steam used throughout the oil refining process.
The water was treated to drinking water standard in spite of being used for industrial purposes.
The income loss will kick in from next month. Lost costs between then and the end of this financial year would be "absorbed" into existing budgets, Adcock said.
The first full year without the water income will amount to $2.5m for the 12 months from July.
If the council did not address the lost income and extra Three Waters costs then they faced a $30m deficit by the end of their current 10-year long-term budget in June 2031, Adcock said.
He described it as unsustainable, particularly as the council had opted out of the country's Three Waters restructure.
What now for Whangārei's Bream Bay water supply at Wilson's Dam in Bream Bay now that the Marsden Pt Oil Refinery is closing?
Marsden Point has been refining oil for just under six decades since May 30, 1964.
The council's 2021-2031 long-term budget has ratepayers paying a 3 per cent water rates increase from July 1 as the 2022/2023 financial year kicks off.
Under the prospective new regime, they could instead pay up to 10 times more than that - a potential increase of up to 31 per cent in extra water rates from that date.
Whangārei Mayor Sheryl Mai described the water rates increase as "very high". She was uneasy about having to consider such an increase.
Whangārei's dramatically-changed water fortunes were highlighted in a council briefing meeting this week that included consideration of what to do about targeted water rates as a result.
Adcock said taking the refinery's water use out of the picture did not correspondingly reduce costs.
Whangārei district councillors at the meeting informally agreed on the fortune change, combined with more than $900,000 in extra annual costs resulting from Three Waters requirements, brought the need for potential water rating increases of up to 31 per cent.
The next step will come at the WDC full council meeting on March 24 when a formal decision will be made on whether to go with the 31 per cent water rates increase proposal.
This will then go out as part of a targeted Annual Plan 2022/2023 public consultation starting on April 1.
Adcock said at the originally-forecast 3 per cent 2022/2023 water rates increase - to $2.38 per cubic metre/1000 litres of water for the coming year - would, in the new post-refinery scenario mean a $3.45m WDC income deficit by the end of that financial year.
A potential 31 per cent increase - to $3.03 per cubic metre/1000 litres of water - would mean breaking even.
It would mean the average Whangārei domestic water consumer would go from paying $414 to as much as $518 a year for water. This would be as a result of an originally forecast rate increase going from $2.38 for every thousand litres of water to as much as $3.03.
Whangārei's average domestic water consumer uses almost 160,000 litres of water annually or about 435 litres a day.
An average medium business would go from paying $7523 to as much as $9568 for a year's water.
Adcock said an alternate 27 per cent water rates increase - to $2.95 per cubic metre/1000 litres of water - would bring a $475,000 deficit.
Deputy Mayor Greg Innes said the district was operating in uncertain times, not knowing how Three Waters restructuring would play out.
"It's an awkward situation with the refinery and reforms. We need to hold to what we have started and pay our way as much as possible," Innes said.
Councillors did not want the district's Three Waters investment to go backwards.
Infrastructure committee chairman councillor Greg Martin said the mooted new increase was not a large amount when looked at in cents per 1000 litres of water rather than a percentage.
"We must be prudent and look after our infrastructure going forward," Martin said.
Councillor Simon Reid said WDC needed to stick to its guns on the 31 per cent water rates increase, to keep ahead of its Three Waters provision as it had been doing, even though the 27 per cent increase was more palatable.
Councillor Tricia Cutforth said it was important for residents and ratepayers to have their say on this during upcoming targeted Annual Plan consultation.
WDC chief executive Rob Forlong said the refinery water income to date had supported Whangārei's Three Waters infrastructure development.
"It [Marsden Point's refining closure] will .. significantly affect our income from water supply, which we have been able to ring fence in the past to keep our assets up to date and investigate and plan for the future," Forlong said.
The Northern Advocate asked whether the new situation would mean WDC looking anew at sending its Bream Bay (Wilson's Dam) water to Mangawhai via the mooted major new supply pipeline.
Mangawhai is New Zealand's fastest-growing coastal settlement and has a shortage of water. The private developer behind Mangawhai's $750m-plus central urban development has shown interest in the infrastructure.
Forlong said such a pipeline would be too big for the council and developer alone to fund. The government would need to be approached, but there were no set dates for doing so.
