KEY POINTS:
Auckland City Mayor John Banks says a proposed 12 per cent rise in bulk water charges will cause hardship for a lot of residents, particularly those on low and fixed incomes.
"A lot of thought is going on as to how the proposed wholesale-retail increases can be avoided because it is worrying greatly for the residents," Mr Banks said yesterday.
"It's already five times more expensive to take a bath in Auckland than Christchurch."
Watercare Services charges 45c for supplying 1000 litres of A-grade drinking water to its six customers - Metrowater (Auckland City), Manukau Water, North Shore City Council, Eco Water (Waitakere City), United Water (Papakura) and Rodney District Council.
The company is proposing to raise its wholesale water price 12 per cent to 50c per 1000 litres from June 30.
It had a surplus of $5.3 million last year which will lower the impact of future years' price rises.
The company says annual rises will be needed to pay for $4.61 billion of work in the next 20 years to upgrade ageing infrastructure for its 1.23 million consumers.
It says a prime example is Project Hobson (now under way), which replaces the 90-year-old sewer pipeline with a larger-capacity and leak-free one below Hobson Bay at a cost of $118.6 million.
Mr Banks said he supported the idea that the council, as the largest shareholder, should lower the company's costs by guaranteeing Watercare's future borrowing.
The council's AA+ credit rating would allow Watercare to alter its gearing ratio and access lower interest rates. Watercare believes savings on loans could result in a wholesale price rise of 7 per cent next year instead of 12 per cent.
The Herald understands that a retail customer now paying $1.40 per 1000 litres would pay about $1.44 if the bulk water price rose by 7 per cent next year.
Metrowater says that in the current year 51 per cent of its net revenue covers the $70 million cost of bulk water and wastewater services from Watercare. The rest goes towards paying for its operating and capital investment needs.
