Our proposal

Our proposal is a Stand-Alone Business Unit (SABU) within Council that meets the additional requirements under LWDW.

Under the SABU model, Council will still be responsible for daily operations, long term strategic planning, and managing and developing water services infrastructure, while meeting new regulatory requirements and remaining accountable to the community.

The new regulatory requirements include:

  • Compliance with drinking water quality and environmental standards set by the Water Services Authority - Taumata Arowai
  • Compliance with investment and pricing regulations set by the Commerce Commission.

    • Our community has expressed satisfaction with our delivery of water services and a desire to maintain local control over water services ownership, governance, operational management and development. Council considers the SABU approach is the best option because it:

    • Balances new requirements like economic regulation while leveraging decades of work already completed with our water services.
    • Maintains the highest level of direct control and accountability with Council
    • Ensures financial sustainability, while continuing to provide other essential services to ratepayers and residents.
    • Enhances local accountability, allowing ratepayers and residents to stay engaged with the delivery of water services
    • Maintains existing integration of services within Council and relationships with key stakeholders.

    The Council acknowledges that keeping water services in-house means meeting new water reform conditions, including regulatory requirements and financial ring-fencing. However, it considers it has the capability, financial headroom and resources to successfully support this transition.

    For these reasons, Council considers the SABU model the best option for delivering sustainable, resilient, and high-quality water services while retaining local control. In the future, Council could choose to move to a different model if there were clear benefits of greater scalability or specialisation.

    Read detailed business case to see ADC's assessment approach for proposed water services delivery model.

    Key features of the SABU

    The SABU model will integrate these additional requirements into its existing practices.

    • Council continues to own and manage water assets, infrastructure, and operations (unchanged)
    • Elected members are responsible for governance and oversight (unchanged)
    • Water rates are set by Council (unchanged)
    • Council will prepare and implement a Water Services Strategy (new)
    • Council must comply with regulators like Taumata Arowai and Commerce Commission (new)
    • Financial ringfencing meaning water revenue is only spent on water services (new)
    • New water focused annual performance and financial reporting (new)
    • Funding capacity restricted by Council’s overall borrowing limits (unchanged)

    Advantages

    This section covers benefits that our proposed model offers.

    • Adaptability

      Ashburton District Council’s existing organisation allows for the efficient integration of the new requirements.

    • Direct local accountability

      Accountability and transparency remain with democratically elected members.

    • Integrated services

      Existing relationships and structures in place within the Council including planning, asset management, property, strategy, civil defence emergency management, and external relationships with key stakeholders including mana whenua and Environment Canterbury.

    • Affordability

      The SABU model is financially viable, with modelling indicating a lower household cost compared to the alternative model.

    • Pricing

      Council maintains full control over charging mechanisms, but would be subject to oversight from the Commerce Commission

    • Funding capacity

      Maintains current borrowing capacity provide by the Local Government Funding Agency (LGFA) of 250%, with sufficient debt headroom

    Disadvantages

    This section covers potential risks associated with our proposed model.

    • Funding limitations

      Since the Council has low debt for non-water services activities, it can handle higher debt for water services. However, this could limit investment in other Council services, as most new of the debt funding will go towards water services.

    • New requirements

      New rules around financial ringfencing and increased regulatory oversight will put additional scrutiny and pressure on Council resources.

    • Resourcing

      New requirements and industry competition may make it challenging to recruit or retain staff and will require changes to current Council systems.

    • Competing priorities

      May lack the specialised focus of CCOs with competing demands across other Council functions.