Discounted Sale Price of Water Sold Between Council Owned Water Supply Schemes Policy

1.0    Purpose

To adopt a unified policy governing the price of water when sold between water supply schemes that are owned by the Council.

2.0    Background

Through the Council’s Policy Review Programme, the following provisions for Water Sale Price were identified for review:

“That the supply of water ex Timaru system to the public supply system of Pleasant Point and the Downlands/Hadlow sub-system/zone be charged at:

  • a             Pleasant Point 50% discount
  • b             Downlands - proposed Hadlow sub-system - 25%”

The provisions were adopted by Council in December 1991 and appear to have been subsequently reviewed in September 1998 with no change. There are no records of any further reviews.

The sale of water between schemes has been an ongoing strategy in augmenting supply in areas where a scheme lacks capacity to fully meet consumer requirements.

A report to the Geraldine Community Board dated 6 August 1998 stated:

“The Te Moana Water Supply currently purchases water from Geraldine at a 50% discount rate.  This discount was established as a district wide policy for water sold prior to entering any reticulation.”

Similarly, a report to the Temuka Community Board dated 14 July 2003 stated: “The Orari intake is to be abandoned in 2003 and the water is to be purchased from the Temuka Water Supply.” The 50% discount policy applied.

The practice is of benefit to the District by optimizing operational capacities of plants and in the process achieving some economies of scale.

As the water sold from one scheme to another is generally sourced from storage reservoirs rather than from within the reticulation, for equity considerations, the sale price of the water sold to another Council owned scheme should recover from consumers of the receiving scheme, the cost of water excluding that portion attributed to reticulation. It has been determined that water reticulation makes up approximately 50% of the cost of potable water.

Water is currently sold between the following schemes:

  1. Timaru to Downlands
  2. Temuka to Orari
  3. Geraldine to Te Moana Downs
  4. Timaru to Seadown

This document sets out the updated Discounted Sale Price of Water Sold Between Council Owned Schemes Policy that applies to all relevant schemes.

3.0    Key Definitions

The following are operational definitions of these terms as used in this policy document:

Cost of water – means the cost to produce potable water, including capital and operating costs for water source, treatment, storage and reticulation

Sale of water – means the sale of water between schemes owned by Council

Sale price of water – means the charge per unit of water as set out in Council’s Fees and Charges Schedule

Discounted sale price of water – means the amount charged to the Council owned scheme purchasing the water

4.0    Policy

  1. The sale of water between Council’s own schemes will be carried out for operational efficiency to augment supply where required and to optimize use of water treatment and storage facilities.
  2. A 50% discount on the sale price of water shall apply when water is taken from a water supply scheme which does not pass through significant lengths of the reticulation of the scheme which is supplying the water.

Adopted District Services Committee 22 March 2016