Local Water Done Well: Timaru District Council considers joining Southern Water

Tuesday, 12 August 2025

Just weeks after Timaru’s council opted to form a council-controlled organisation (CCO) to deliver water services it could instead join with other councils earlier than anticipated.

Last month, councillors voted unanimously to establish a CCO with the option of joining other councils in the future.

The Timaru District Council had been forced to change tack after its preferred option – to establish a joint model with neighbouring district councils – was taken out of its hands by Mackenzie, Waimate, and Waitaki councils who voted to keep their operations in-house.

Now, the council had called an emergency meeting on Tuesday to consider the signing of a joint CCO with the Central Otago, Clutha and Gore district councils, to be known as Southern Water.

Councillors would also consider authorising a pre-approval for the Waitaki District Council to join the group at a later date.

If councillors agreed to do so, they would authorise chief executive Nigel Trainor to enter into an agreement with Southern Water.

A report in the agenda for Tuesday’s meeting, prepared by group manager corporate and communications Stephen Doran, said in line with the resolution passed by councillors on July 22, its water services steering group had been engaged in discussions with the Southern Water group of councils.

“The discussions have been relatively positive with both groups,’’ the report says.

Southern Water was made up of Central Otago, Gore, Clutha and Waitaki councils which all consulted on three options.

Those options were a multi-council water service CCO, a standalone council CCO or in-house model.

Waitaki also consulted on a fourth option – a multi-council CCO with neighbouring South Canterbury councils – but it chose to keep its water services in-house.

The report said legal advice was that the southern councils would not have to consult again to have Timaru join the Southern Water CCO.

To support this work, a commitment agreement template had been developed by the Department of Internal Affairs for councils to modify and adopt as they worked to develop and establish a joint organisation for water services.

The Southern group believed there were advantages to have Timaru join, the report said.

“The Southern Group are very open and have assisted Timaru with any queries on the water schemes and the cost structures as they compare to Timaru,’’ the report said.

“As resolved by TDC, the preferred option is for TDC to join a multi-council WSCCO, there is an offer from Southern to join.’’

It wanted a commitment from Timaru’s council by September 3.

The report said for Local Water Done Well to be successful in the longer term, it required CCOs to have scale in terms of connections, which translated to revenue.

The advantages of scale included joint IT and information systems, debt headroom, and the calibre of professional governance.

The Southern group had the opportunity to expand as others came on board, meaning the scale would continue to increase.

The grouping, as it stood, would have just under 50,000 connections, which brought more favourable Local Government Funding Agency covenants, the report said.

A list of pros and cons in joining, listed in the report, said while a CCO would provide for high level benefits of water services delivery, the direction had been to adopt a joint CCO.

Joining with Southern Water would attract higher calibre applicants for its board and chief executive as it was a larger group, it would be more likely to attract other councils and would increase the water service connection count, the report said.

Rural water schemes were also provided for in the model, it said.

However, if another alternative joint CCO option was presented, the council would not be able to adopt it.

Another con was the tight time frame to draft a water service plan that aligned with Southern’s.

The finance rate assumptions for Southern and Timaru were close, but the difference was the level of debt for each party.

“The depreciation rates are on average the same, the difference is the book value of the assets,’’ the report said.

“The operating expenses are higher for Southern; this has been discussed and can be put down to the number of water schemes, the type of water scheme.

“We can confirm that there is significant difference across the different councils in the number of schemes that they operate, with some requiring more mechanical machinery to run the schemes.’’

If the prices for delivery were not harmonised it would “not be a significant issue’’, the report said.

“Overheads are also low in Timaru and this needs to be reviewed.’’

While Selwyn’s council had expressed an interest in having additional partners in its CCO it had been clear no decision would be made until after the local body elections in October, the report said.

“In addition, Selwyn would be required to consult with their community on a multi-council WSCCO.’’

An amendment to its approved water services delivery plan would also need to be worked through with the Department of Internal Affairs.

“A Selwyn option therefore is not on the table at this point,’’ the report said.