The CODC has embarked on a multi-year project to meter all water supplies.
Metering has been introduced for three reasons:
1. To provide reliable information on water use
2. To allow charging for excess use, to manage down consumption
3. So that future water treatment plants can be constructed at affordable costs - designed to treat a moderated demand curve rather than a very high peak demand
Commercial users and those ratepayers who inhabit sections larger than 1,100 square metres will receive bills this financial year - many will have already, and commercial users may have been receiving bills for some years.
Households with smaller sections (almost all residents on township supplies) will not receive their first bill until at least next year, as the council reviews both the basis of free allocations, and the costs of excessive use.
Where the council goes next will be the subject of a report to the next meeting - the first of the new council - and this report is still under development.
Charges for water vary from ward to ward across Central - because each separate water scheme has its own unique costs, and because the community boards have chosen different free allocations (674m3 per year in Clyde, 365 m3 for year in Cromwell).
As we develop the key council paper for the October meeting, views about how to make further progress are shaping up.
I'm proposing the following principles in a submission to the process to be lodged tomorrow (Monday):
(1) The council should provide a uniform allocation of free water to all householders, regardless of where they live (likely to be about 500 cubic metres per year, perhaps reducing in steps over a period of years)
(2) The cost of any additional water should be the marginal (real) cost of supplying that water (likely to be around $0.50 per cubic metre), not an arbitrary penalty
(3) The council has problems with a category of water users for whom demand is inelastic - schools, bowling greens, other turf-based sports clubs, private parks with public access but no ability to charge entry fees, and so on. We need to resolve those dilemmas. One solution may be a tiered approach to the zero-rated (free) allocation, depending on factors like community use, social benefit and so on.
Notes: 1. It has been claimed that our excess charges are a tax that penalise frugal users
2. In many respects, domestic water is an inelastic good (its consumption is not affected by changes in cost. Other inelastic goods are tobacco and petrol). As charges are applied there will be a small dip in consumption as leaks are fixed and waste is eliminated, then our charges just become a regressive tax on households (regressive means not related to income – as with GST, those who can afford it least pay the most in proportion to their income)
3. The use of zero-rated units may perversely act to encourage consumption, as people make sure they use more to get their money's worth
4. A uniform charge for all district users implies the districtisation of water management - with all schemes managed in common, by the council rather than by community boards. I support an analysis of the costs and benefits of this approach, and in the absence of good evidence against it, will support this as one element of the council's new approach.
Malcolm Macpherson
Sunday, September 19, 2010