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A parliamentary committee has started investigating the Auckland City Council's controversial 9.1 per cent rise in water bills and wants answers from the council, its water company and the region's monopoly water supplier.
The investigation follows revelations that the council had broken a promise last year to keep water rates increases just above inflation.
Instead, it has raised prices by 9.6 per cent and 9.1 per cent in the space of 10 months.
The average household water bill in Auckland City has risen from $800 to $1000. Some large households, including low-income families, will have to pay about $400 more a year for water on top of soaring local body rates.
Last night, National MP John Carter said the local government and environment select committee decided yesterday to act on a petition from Water Pressure Group spokeswoman Penny Bright to look into the 9.1 per cent price rise.
A story in yesterday's Herald on water prices also influenced the committee.
Mr Carter, who was acting chairman at yesterday's meeting, said the MPs' panel would ask the council, its water company Metrowater and the region's bulk water supplier Watercare for some written background material in the next month. Shortly afterwards, the public bodies would be asked to appear before the committee at Parliament to discuss the matter more fully.
Mr Carter, National's local government spokesman, said the investigation could "expand into a wider inquiry but that's a discussion for the future".
It is understood one of the issues the committee wants to address is the difference in the wholesale and retail price of water.
Watercare sells water to six councils for 45c per 1000 litres. Metrowater will retail the same water for $1.41 from July, making it the most expensive water price across the Auckland region.
The committee will also investigate Watercare plans to double its wholesale price to 91c over eight years from 2008 to pay for capital works. This roughly equates to a 50 per cent hike in retail prices.
Furthermore, there is a proposal for Watercare to pay a dividend to its shareholders - the six councils - which would lead to further price increases.
Ms Bright hoped the committee would find that the "commercial model for water is a rort and a fraud perpetrated on the public".
Metrowater chief executive Jim Bentley was unaware of the investigation last night but said the company would comply.
A Watercare spokesman said it looked forward to addressing the select committee.
When the council consulted ratepayers last year about plans for much higher dividends from Metrowater, it said water and wastewater charges would be "small" and go up by inflation plus 1 per cent until 2014.
