Review of Volumetric charging proposed to manage water use

A request for an on-demand water supply at a large-lot Cromwell development has prompted discussion regarding the future supply of water and whether the current volumetric charging is sufficient to manage high water use.

At its meeting in Alexandra today (Wednesday 30 August 2023) the Central Otago District Council discussed the request from the developer of Shannon Farm, Ripponvale, regarding the water supply to 170 large residential lots.

The Council was asked to consider the provision of an on-demand treated water supply to these properties from the Cromwell water scheme. After discussion with staff, this had resulted in a proposal from Shannon Farm for a separate reticulated irrigation supply, fed from a private bore, and an irrigation agreement for each lot purchaser, to avoid having a water restrictor and tank on each property.

In her report to Council, CODC Three Waters Director Julie Muir said as part of the consideration to this request, staff had to take into account the risk that residents would continue to use the potable supply for irrigation rather than the separate irrigation supply, which would put further pressure on supply.

The current volumetric charge is low, and the Uniform Annual Charge is high compared to other councils. With volumetric charging, people are charged for what they use, and because the volumetric charge is so low, this may not achieve the demand management outcomes desired for some high-demand properties, or those who were able to pay, she said. With high uniform annual charging every property ends up paying more, instead of just those who have high water use.

Volumetric charging, using pricing was recommended as the most equitable option to manage high water use and is defined as a rate under the rating legislation. This meant the Council could then review the proportion of rates collected through volumetric charges to ensure this met both financial and non-financial objectives.

Cr Neil Gillespie said the recommendation was logical “because of where we’ve ended up with metering”. Universal metering and volumetric charging was introduced nearly 20 years ago. However, in the ensuing discussion, it was decided that some things had changed since, such as the size of sections, and the cost of water and infrastructure, and that it was timely for the model to be reviewed “to test out the logic”. Cr Tamah Alley suggested staff come up with a hybrid model that would reflect the fact that the Council was trying to encourage people to reduce consumption.

Further work would be done to identify the options for implementing changes, to consider the balance between achieving water conservation and efficiency, against financial stability and sufficient cost recovery, Ms Muir said.

These options would then be referred to council for further consideration, and then included in the Long-term Plan, and public consultation would follow.