Coun­cil backs bid to cut bulk wa­ter prices

Auckland City Harbour News - - News - By Heather McCracken

A bid to re­duce the price of bulk wa­ter has been ap­proved by the Auck­land City Coun­cil.

The coun­cil is to guar­an­tee Water­care’s debt, giv­ing the com­pany ac­cess to cheaper bor­row­ing.

Coun­cil­lor Doug Arm­strong says it’s a “com­mon sense” move.

“It’s ab­so­lutely worth do­ing and has neg­li­gi­ble ef­fect on the bal­ance sheet of Auck­land city,” Mr Arm­strong says.

Lever­ag­ing the coun­cil’s AA+ credit rat­ing means Water­care can bor­row at a lower cost.

It also means the com­pany doesn’t need to main­tain sur­pluses in or­der to keep an A credit rat­ing.

The guar­an­tee may lower the coun­cil’s credit rat­ing, adding to debt costs, but Water­care will pay a fee to cover it.

The coun­cil says the risk of Water­care de­fault­ing on its debt is very low.

The bulk wa­ter price was fore­cast to in­crease by 30 per­cent next year.

The coun­cil says the guar­an­tee will mean a 13 per­cent rise in­stead.

Mr Arm­strong says the price hike re­sults from tight con­trols on wa­ter prices in pre­vi­ous years.

“We’ve had the ben­e­fit of hold­ing prices for the past four or five years at in­fla­tion less 3 per­cent, and frankly that was pretty tough on Water­care,” he says.

In­fra­struc­ture main­te­nance and up­grades, meet­ing new stan­dards and the ex­tra cost of treat­ing Waikato River wa­ter have also driven up prices.

“As the city grows they need to use more Waikato wa­ter than Hunua or Waitakere, and that’s four to five times more ex­pen­sive,” Mr Arm­strong says.

The plan was ap­proved at a full coun­cil meet­ing on Thurs­day last week.

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