KEY POINTS:
Manukau Water is lobbying for a law change to avoid the possibility of having to pay back trade waste charges to businesses.
A water executive in Auckland told the Herald that the potential liability for Manukau Water and Auckland City Council's water company, Metrowater, ran to millions of
dollars and had set off alarm bells with the Auditor-General.
The water division of Manukau City Council upset several large businesses with hefty trade waste charges that came into effect when the company was set up in July 2006.
Manukau businesses are also legally bound to pay the region's bulk water company, WaterCare, trade waste charges to deal with their discharges at the Mangere waste treatment plant.
Leonard's Superior Smallgoods has been battling Manukau Water since the company initially tried to raise its bill more than 10,000 per cent from $2366 to $245,585. The award-winning sausage maker is still up in arms over transporting wastewater from its East Tamaki plant a kilometre along the Manukau Water pipe until it enters the WaterCare pipe.
Manukau Water has become aware of a potential legal issue regarding trade waste charges, and has started lobbying for an amendment to the Auckland Metropolitan Drainage Act.
The company approached the Auckland Regional Council, but was told the issue should be left to the Royal Commission of Inquiry on Auckland Governance, which is is considering a single company for the splintered water industry.
ARC chairman Mike Lee said it was not appropriate to be considering legislative changes to any aspect of local government in Auckland while the royal commission was deliberating. The commission has until March 31 next year to report on a new structure for local government.
Metrowater is also distancing itself from Manukau Water's lobbying.
Chief executive Jim Bentley said the time to tidy up the issue was when the royal commission made recommendations.
He said Metrowater had charged businesses to move trade waste through its pipes since the company was set up in 1997.
Employers and Manufacturers Association (Northern) executive officer Peter Atkinson said the issue would probably be eclipsed by governance re-organisation in Auckland.
A spokeswoman for the Auditor-General said the office was aware of the legal issue, had been briefed by both water companies and understood they were working on a proposed solution that may take time to resolve.
The Auditor-General would have to consider a response if the issue was not resolved, she said.
The spokeswoman said Manukau Water and Metrowater had included a contingent liability note in their 2007 and 2008 financial statements about the issue, which was in accordance with the relevant accounting standard.
Manukau Water communications manager Mark Reynolds said the company charged 31 customers out of about 100,000 trade waste charges for the flow through its pipes.
Its 2007-2008 annual report notes a "potential legal issue" regarding trade waste charges, which was dependent on the interpretation of legislation.
It goes on to say that "having taken independent advice, the directors are of the view that there is no material risk to the company and no liability to repay these amounts. As such, Manukau Water Ltd considers the likelihood of any financial impact to be remote".
MURKY WATER
* Businesses pay trade waste charges to Manukau Water and Metrowater to flush waste down their pipes.
* Businesses also pay trade waste charges to WaterCare to deal with discharges at the Mangere waste treatment plant.
* Legal questions have arisen over the Manukau Water and Metrowater charges.
* Manukau Water wants a law change to avoid the possibility of having to pay back money to businesses.
* Metrowater and others say the matter should be resolved as part of the Royal Commission of Inquiry on Auckland Governance.