By Dr John Small, Commerce Commission Chair
Later this month, the Commerce Commission will begin applying economic regulation to Wellington Water. I'd like to share a little more about what this means for both Wellington Water and its consumers.
Wellington Water has been facing some tough questions lately, with the organisation under growing scrutiny over its performance, governance, and management. A series of reports have highlighted operational shortcomings and identified opportunities for improvement. These findings suggest Wellington Water needs to improve the value for money it provides to its customers.
A new step toward accountability
To help address these issues, the Government has activated the Commerce Commission's ability to apply an early form of economic regulation to Wellington Water. Called foundational information disclosure (Foundational ID), this regulation means that Wellington Water will need to publicly share key performance information. The aim is to give ratepayers and other stakeholders a clearer view of how it is performing.
This temporary measure is enabled by the Local Government (Water Services Preliminary Arrangements) Act 2024 (WSPA Act) and will stay in place until the long-term information disclosure regime is implemented.
Understanding the regulatory landscape
Wellington Water is a council-controlled organisation (CCO), overseen by a Board and guided by the Wellington Water Committee, which consists of representatives from its shareholding councils. It operates under quality and environmental regulations from Taumata Arowai and the Greater Wellington Regional Council.
These new Foundational ID requirements apply only to Wellington Water, not to the councils that own it. So it does not cover things like funding decisions, billing, and customer service which are still handled by individual councils. The ID rules are focussed on only those things that Wellington Water is responsible for.
Why transparency matters
Information disclosure is a powerful tool. When performance data are made public, it encourages organisations to improve, whether through reputational pressure, stakeholder feedback, or stronger governance accountability. This transparency helps the public understand whether things are improving and whether their rates are being well spent.
For Wellington Water, this means providing information on its own website in a way that its customers can easily find and understand. This will include things like faults, response times, levels of service that are promised to them and the cost of this service.
Building on existing insights
In developing this regulation, we found there is already a significant amount of publicly available information about Wellington Water's performance. Experts have reviewed that information and made recommendations, many of which Wellington Water has already acted on or is actively working to implement. These efforts are especially important now as Wellington Water prepares to transition into new water service entities from mid next year.
The main result of those recommendations is the development of the Wellington Water Culture and Value for Money Improvement Plan. The improvement plan is significant because it will help drive change during this critical transitional period for Wellington Water.
As part of the requirements, Wellington Water is expected to report on its progress against this plan. This will help ratepayers and other stakeholders track improvements and assess whether the organisation is delivering better outcomes for the communities it serves.
Looking ahead: successor entities and future regulation
All shareholding councils have completed Local Water Done Well consultations and reached agreement on their respective paths forward. This has resulted in agreement to either join a new stand-alone entity, with the interim name 'Metro Water' or in the case of South Wairarapa District Council, to join with the Tararua District Councils as Wairarapa-Tararua.
Foundational ID marks the beginning of our regulation of Wellington Water and sets the stage for its successor organisations. Our design takes account of the purposes of the WSPA Act, the risks and costs of compliance, and the significant changes that Wellington Water is currently undergoing.
As Wellington Water begins sharing information later this year, we will review and analyse the information and publish a summary of our findings. The insights we gain from this information and analysis may shape regulatory requirements for the future.
A cooperative effort
We're grateful to Wellington Water for its cooperation and openness throughout this process. The information provided to date has helped us better understand the situation. Public feedback on our proposal has also been positive, with most people supporting the direction we have taken.
Looking ahead
Foundational ID is not a precedent for other water entities, but a targeted response to Wellington Water's unique circumstances. It is a step toward greater transparency, improved performance, and ultimately, better outcomes for ratepayers and communities.
As we move forward, we remain committed to ensuring that economic regulation supports the long-term interests of consumers and helps deliver high-quality, reliable water services across the country.
