Water firm has millions to spare

A cash payout and cheaper water bills are being mooted for the 142,000 residential and business customers of Metrowater as Auckland City Council decides what to do with the bulging balance sheet of its water business.

Despite being told to keep profits to a minimum, council-run Metrowater has accumulated $62 million in spare cash and the council is looking at taking $50 million by way of a "charitable payment".

The possibility of a cash injection comes just as the council has increased rates by 9.7 per cent and changed the rating system to hit thousands of high-value property owners with rises of $250 or more.

Finance committee chairman Vern Walsh said yesterday a workshop would be held next month to review Metrowater, its pricing structures and whether to take the $50 million. It was also a chance for City Vision-Labour councillors to look at their policy of funding wastewater charges through general rates.

Mr Walsh said the $50 million could go into a strategic asset fund for capital projects or some or all of it could be distributed to customers.

Distributed equally, the $50 million would be worth about $350 for each household and business.

Council officers have already suggested putting the money into the strategic asset fund to help pay for the $73 million Civic Carpark leaky roof crisis, which must be fixed in the next few years at the expense of other capital projects.

The council is set to receive a windfall of between $13 million and $40 million from its shareholding in Auckland Airport. The company is returning between $100 million and $300 million to shareholders before the end of the year.

The airport dividend will go into the strategic asset fund for spending on capital projects.

Mr Walsh said he was not surprised Metrowater had accumulated $62 million because it operated as a very efficient business but "it can't be allowed to continue at this rate".

Several years ago, Metrowater was told to prune profits from normal business levels to a return on equity of between 1 per cent and 4 per cent.

Despite this, and the introduction two years ago of a 10 per cent prompt payment discount on water bills, its cash reserves have continued to swell.

Green Party councillor Neil Abel said any dividend should be reflected in the areas where the money was collected, in water and wastewater, and not diverted into other areas such as the Civic Carpark.

$50 million Auckland City Council is deciding between:

* Giving Metrowater's customers up to $300 each.
* Using the money to fix the Civic Carpark's leaky roof.
* Putting it in a fund for future projects.