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Commerce Act 1986

Offences, regulations, and administrative provisions

Schedule 7: Additional matters relating to regulation of water services

You could also call this:

"Rules for Fair Water Services"

Illustration for Commerce Act 1986

The Commerce Act 1986 has a schedule about water services. You need to know what this schedule says.

This schedule is about how water services are regulated. It talks about things like ring-fencing revenue, information disclosure, and quality regulation. The Commission is in charge of making sure water services are regulated fairly.

The Commission can make decisions about how water services are run. These decisions are called section 52P determinations. The Commission must consult with interested parties before making these decisions.

The schedule also talks about input methodologies. These are like rules that the Commission uses to make decisions. The Commission must determine these methodologies for information disclosure and price-quality regulation.

There are also rules about how the Commission can share information with other agencies. The Commission can provide information to these agencies if it thinks it will help them do their jobs.

You should also know that the schedule has its own definitions for words like "consumer", "local government water service supplier", and "regulated supplier". These definitions are important for understanding what the schedule says.

The Commission has the power to monitor compliance with the requirements in the schedule. It can ask for information from regulated suppliers and use this information to make decisions.

Overall, the schedule is an important part of the Commerce Act 1986. It helps make sure that water services are regulated in a way that is fair and good for consumers.

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Schedule 6: Exemptions from Part 4 in respect of specific pipelines, or

"Pipelines that don't have to follow some New Zealand law rules"

7Additional matters relating to regulation of water services Empowered by s 57V

1Ring-fencing of revenue

3Application of this Part

  1. This Part applies to every person that is a regulated supplier in relation to 1 or more regulated water services.

Notes
  • Schedule 7 clause 3: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

4Purpose of this Part

  1. The purpose of this Part is to ensure that regulated suppliers act in accordance with the following as applied to regulated water services:

  2. the financial principle in section 18(1)(a) of the Local Government (Water Services) Act 2025:
    1. section 18(3) of that Act.

      Notes
      • Schedule 7 clause 4: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

      5Section 52P determinations may relate to requirement to ring-fence revenue

      1. If the Commission considers it necessary or desirable, the Commission may make 1 or more section 52P determinations relating to 1 or more regulated suppliers with requirements that give effect to the purpose of this Part, including requirements—

      2. that may require the supplier to ensure that a portion of the revenue it receives from providing 1 or more regulated water services is invested in that or those regulated water services, including in a particular asset, expense category, project, programme, or type of regulated water service, or held in reserve for any of those matters:
        1. that may set limits on any dividends paid by a water organisation, to the extent necessary or desirable to ensure the organisation acts in accordance with section 18(3)(b) of the Local Government (Water Services) Act 2025.

          1. Every regulated supplier of services must comply with every section 52P determination applying to the supplier under this clause (as if the determination were made, and related to a type of regulation, under Part 4 of this Act).

          2. Section 87 (which relates to pecuniary penalties) and sections 87A, 87B, and 87C (which relate to compensation, an offence, and injunctions) apply to a regulated supplier on and from 1 July 2027 in respect of a contravention of subclause (2) (as if it were a contravention of a type of regulation under Part 4 of this Act that is referred to in those sections).

          3. The Commission is entitled to exercise any of its powers under this Act for the purpose of monitoring compliance by regulated suppliers with a section 52P determination made under this clause.

          Notes
          • Schedule 7 clause 5: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

          2Additional matters for information disclosure regulation

          6Additional matters relating to information disclosure regulation under subpart 12 of Part 4

          1. This Part applies to a section 52P determination relating to information disclosure regulation imposed under subpart 12 of Part 4 of this Act.

          2. The Commission may have regard to the scale, complexity, and risk profile of each supplier (or a class of suppliers), or the type of water services being provided by each supplier (or class of supplier), to which the determination will apply (for example, by requiring more or less information to be disclosed).

          3. In addition to the information referred to in section 53C(2), the determination may require 1 or more of the following to be disclosed:

          4. consolidated information that includes information about goods or services that are not subject to regulation under Part 4 of this Act, in which case clause 7 applies (and this paragraph applies instead of section 53C(2)(k)):
            1. information about the financing of regulated suppliers that includes information about goods or services that are not subject to regulation under Part 4 of this Act, in which case clause 7 applies:
              1. in relation to a local government water service supplier’s provision of water services, information about how the supplier is supporting and enabling planning processes, growth, and housing and urban development and, in particular, the supplier’s level of responsiveness in relation to those issues.

                1. In addition to what it may do under section 53C(3), the section 52P determination may require independent audits, assurance, or other verification of disclosed information, and may impose requirements in connection with who may carry out the audit, assurance, or verification.

                2. The Auditor-General is the auditor in respect of any public entity for which a section 52P determination requires independent audits, assurance, or other verification of disclosed information.

                3. The Commission may gather information about regulated activities from any party holding that information (for example, a previously regulated supplier or a contracted party) for the relevant disclosure year or part of a disclosure year.

                4. However, the Commission may not require the Auditor-General to give information under subclause (6).

                Notes
                • Schedule 7 clause 6: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                7Section 52P determination may require supplier to provide additional information

                1. The purpose of this clause is to enable the Commission to monitor—

                2. compliance with requirements to disclose information under Part 4 of this Act in relation to supplying water services; and
                  1. compliance with Part 1 of this schedule (which relates to ring-fencing of revenue); and
                    1. the ongoing capability of a supplier to raise finance with respect to its supply of water services by assessing the supplier’s overall financial position.

                      1. A section 52P determination may require a supplier to disclose information referred to in subclause (3) only to the extent required to enable the Commission to monitor 1 or more of the matters referred to in subclause (1).

                      2. If a supplier supplies goods or services that are not incidental to or related to supplying water services (other goods or services), a section 52P determination may require the supplier to disclose—

                      3. consolidated financial statements, and any other information referred to in section 53C or clause 6, for all activities (including those related to the supply of other goods or services) undertaken by that supplier; and
                        1. consolidated financial statements, and any other information referred to in section 53C or clause 6, for supplying all other goods or services in aggregate; and
                          1. reconciliation of information provided under paragraphs (a) and (b) with information disclosed in accordance with information disclosure requirements applying to supplying water services; and
                            1. information about financing all activities (including those related to supplying other goods or services) undertaken by that supplier.

                              1. If a local government water service supplier operates a split decision-making model, a section 52P determination may require the supplier to disclose consolidated information that includes—

                              2. information about any other regulated supplier that makes 1 or more of the other of those decisions in that split decision-making model; and
                                1. information about other goods or services supplied by that other regulated supplier.

                                  Compare
                                  Notes
                                  • Schedule 7 clause 7: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                  3Revenue threshold regulation

                                  8Purpose of revenue threshold regulation

                                  1. The purpose of revenue threshold regulation is to promote the ongoing recovery of revenue at a level that covers efficient costs, so that regulated suppliers invest in water services infrastructure to meet consumer demands.

                                  Notes
                                  • Schedule 7 clause 8: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                  9Section 52P determination to set out revenue thresholds

                                  1. A section 52P determination relating to water services that are subject to revenue threshold regulation must—

                                  2. specify the services to which it applies; and
                                    1. specify the suppliers to which it applies; and
                                      1. specify either or both of the following (a revenue threshold):
                                        1. the maximum revenues that should be recovered by a regulated supplier; and
                                          1. the minimum revenues that should be recovered by a regulated supplier.

                                          2. In specifying matters under subclause (1), the Commission may consider either or both of the following:

                                          3. any information provided under information disclosure regulation:
                                            1. any other information it thinks fit.

                                              Notes
                                              • Schedule 7 clause 9: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                              10Effect of being subject to revenue threshold regulation

                                              1. If a section 52P determination relating to revenue threshold regulation applies to a regulated supplier,—

                                              2. the supplier is not required to comply with the revenue threshold (and section 52F does not apply); but
                                                1. the Commission may exercise any of its powers under this Act for the purpose of monitoring the supplier’s performance against the revenue threshold; and
                                                  1. the Commission must consider the supplier’s performance against the revenue threshold before recommending further regulation under section 57G (see section 57H(1)(a)(iii)).

                                                    Notes
                                                    • Schedule 7 clause 10: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                    4Quality regulation

                                                    11Purpose of quality regulation

                                                    1. The purpose of quality regulation is to regulate the quality of water services supplied by regulated suppliers.

                                                    Notes
                                                    • Schedule 7 clause 11: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                    12Effect of being subject to quality regulation

                                                    1. A regulated supplier to which a section 52P determination relating to quality regulation applies must apply the quality paths set by the Commission in the determination in respect of all water services that are—

                                                    2. supplied by the supplier; and
                                                      1. specified in the determination.

                                                        Notes
                                                        • Schedule 7 clause 12: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                        13Section 52P determination to set out quality path requirements

                                                        1. A section 52P determination relating to quality regulation must specify the quality paths that apply to each regulated supplier to which the determination applies.

                                                        2. A quality path must specify the following:

                                                        3. the quality standards that a regulated supplier must meet:
                                                          1. the date or dates on which the quality path (or any part of it) takes effect:
                                                            1. the date or dates by which compliance must be demonstrated.

                                                              1. In specifying a quality path, the Commission may have regard to the scale, complexity, and risk profile of each regulated supplier (or a class of regulated suppliers), or the type of water services being provided by each supplier (or class of supplier), in respect of which it will apply, for example, by doing either or both of the following:

                                                              2. undertaking a greater or lesser degree of scrutiny of a supplier (or class of suppliers) with respect to historical and forecast quality of supply:
                                                                1. setting quality standards at a more or less onerous level.

                                                                  1. A quality path may include incentives for a regulated supplier to maintain or improve its quality of supply, and those incentives may include (without limitation) either or both of the following:

                                                                  2. compensation schemes that set minimum standards of performance and require the supplier to pay prescribed amounts of compensation to consumers if it fails to meet those standards:
                                                                    1. the use of schemes that rate or rank various aspects of the supplier’s performance in meeting the required quality standards or any performance requirements.

                                                                      Compare
                                                                      Notes
                                                                      • Schedule 7 clause 13: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                      14Other matters relating to quality path requirements

                                                                      1. A quality path does not apply to a regulated supplier until the date specified in the relevant section 52P determination.

                                                                      2. Quality standards may be prescribed in any way the Commission considers appropriate (such as targets, bands, formulas, or timetables for responsiveness to consumers).

                                                                      Notes
                                                                      • Schedule 7 clause 14: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                      15Reopening quality path if input methodology changes as result of appeal

                                                                      1. The Commission must reopen a quality path, and make a new quality path by amending the relevant section 52P determination in accordance with section 52Q, if—

                                                                      2. an input methodology changes as a result of an appeal under section 52Z; and
                                                                        1. had the changed input methodology applied at the time the quality path was set, it would have resulted in a materially different path being set.

                                                                          Compare
                                                                          Notes
                                                                          • Schedule 7 clause 15: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                          16No other reopening of quality path

                                                                          1. Except as provided in clause 15, the Commission must not reopen a quality path within a regulatory period on the grounds that an input methodology is made or changes.

                                                                          Compare
                                                                          Notes
                                                                          • Schedule 7 clause 16: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                          5Performance requirement regulation

                                                                          17Purpose of performance requirement regulation

                                                                          1. The purpose of performance requirement regulation is to regulate the performance (other than in relation to prices) of water services supplied by regulated suppliers.

                                                                          Notes
                                                                          • Schedule 7 clause 17: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                          18Effect of being subject to performance requirement regulation

                                                                          1. A regulated supplier to which a section 52P determination relating to performance requirement regulation applies must comply with the performance requirements set by the Commission in the determination in respect of all water services that are—

                                                                          2. supplied by the supplier; and
                                                                            1. specified in the determination.

                                                                              Notes
                                                                              • Schedule 7 clause 18: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                              19Section 52P determination to set out performance requirements

                                                                              1. A section 52P determination relating to performance requirement regulation must specify the performance requirements that apply to each regulated supplier to which the determination applies.

                                                                              2. A performance requirement must specify the following:

                                                                              3. the performance requirement that a regulated supplier must meet:
                                                                                1. the date or dates on which the requirement (or any part of it) takes effect:
                                                                                  1. the date or dates by which compliance must be demonstrated.

                                                                                    1. In specifying a performance requirement, the Commission may have regard to the scale, complexity, and risk profile of each regulated supplier (or a class of regulated suppliers), or the type of water services being provided by each supplier (or class of supplier), in respect of which it will apply, for example, by doing either or both of the following:

                                                                                    2. undertaking a greater or lesser degree of scrutiny of a supplier (or class of suppliers) with respect to historical and forecast performance of supply:
                                                                                      1. setting performance requirements at a more or less onerous level.

                                                                                        1. A performance requirement may include—

                                                                                        2. incentives for a regulated supplier to maintain or improve its performance, and those incentives may include (without limitation) either of the following:
                                                                                          1. compensation schemes that set minimum standards of performance and require the supplier to pay prescribed amounts of compensation to consumers if it fails to meet those standards:
                                                                                            1. the use of schemes that rate or rank various aspects of the supplier’s performance in meeting the performance requirement; and
                                                                                            2. any of the following requirements:
                                                                                              1. requirements to adopt a particular approach to risk management:
                                                                                                1. requirements in relation to the condition of assets and remaining asset life:
                                                                                                  1. requirements to make particular types of investment:
                                                                                                    1. requirements to provide information about any investments planned for a particular period:
                                                                                                      1. requirements to deliver particular outputs:
                                                                                                        1. requirements to consult the Commission about certain kinds of investments and investment decisions:
                                                                                                          1. requirements to adopt asset management policies and practices:
                                                                                                            1. reporting requirements, including—
                                                                                                              1. to whom reports must be made; and
                                                                                                                1. the timing of reports; and
                                                                                                                  1. special reporting requirements in asset management plans, if the regulated supplier fails to meet the quality standards or other performance requirements; and
                                                                                                                    1. any other matters relating to reporting, including requirements for additional information:
                                                                                                                    2. requirements that any disclosed information, or any information from which disclosed information is derived, be verified by statutory declaration or certified (in the form specified by the Commission) as true and accurate:
                                                                                                                      1. requirements to undertake cost-benefit analysis before specified projects are begun:
                                                                                                                        1. requirements relating to consultation and engagement with consumers:
                                                                                                                          1. requirements based on comparative benchmarking of efficiency.

                                                                                                                          Compare
                                                                                                                          Notes
                                                                                                                          • Schedule 7 clause 19: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                          20Other matters relating to performance requirements

                                                                                                                          1. A performance requirement does not apply to a regulated supplier until the date specified in the relevant section 52P determination.

                                                                                                                          2. Performance requirements may be prescribed in any way the Commission considers appropriate (such as targets, bands, formulas, or timetables for responsiveness to consumers).

                                                                                                                          Notes
                                                                                                                          • Schedule 7 clause 20: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                          6Price-quality regulation

                                                                                                                          21Purpose of price-quality regulation

                                                                                                                          1. The purpose of price-quality regulation is to regulate the price, quality, and performance of water services supplied by regulated suppliers.

                                                                                                                          Notes
                                                                                                                          • Schedule 7 clause 21: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                          22Effect of being subject to price-quality regulation

                                                                                                                          1. A regulated supplier to which a section 52P determination relating to price-quality regulation applies must apply the price-quality paths set by the Commission in the determination in respect of all water services that are—

                                                                                                                          2. supplied by the supplier; and
                                                                                                                            1. specified in the determination.

                                                                                                                              Notes
                                                                                                                              • Schedule 7 clause 22: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                              23Section 52P determination to set out price-quality path requirements

                                                                                                                              1. A section 52P determination relating to price-quality regulation must specify the price-quality paths that apply to each regulated supplier to which the determination applies.

                                                                                                                              2. A price-quality path must specify the following:

                                                                                                                              3. the regulatory period to which it applies (including specifying whether the period is common to all regulated suppliers or specific to 1 or more suppliers):
                                                                                                                                1. in relation to prices, 1 or more of the following:
                                                                                                                                  1. the maximum price or prices that a regulated supplier may charge:
                                                                                                                                    1. the minimum price or prices that a regulated supplier may charge:
                                                                                                                                      1. the maximum revenues that a regulated supplier may recover:
                                                                                                                                        1. the minimum revenues that a regulated supplier may recover:
                                                                                                                                        2. the quality standards that a regulated supplier must meet:
                                                                                                                                          1. the date or dates on which the price-quality path (or any part of it) takes effect:
                                                                                                                                            1. the date or dates by which compliance must be demonstrated.

                                                                                                                                              1. A price-quality path may include circumstances in which the path may be reconsidered during a regulatory period.

                                                                                                                                              2. In specifying a price-quality path, the Commission may have regard to the scale, complexity, and risk profile of each regulated supplier (or a class of regulated suppliers), or the type of water services being provided by each supplier (or class of supplier), in respect of which it will apply, for example, by doing any 1 or more of the following:

                                                                                                                                              3. undertaking a greater or lesser degree of scrutiny of a supplier (or class of suppliers) with respect to historical and forecast prices, expenditure, performance, and quality of supply:
                                                                                                                                                1. setting higher or lower maximum prices or revenues:
                                                                                                                                                  1. setting higher or lower minimum prices or revenues:
                                                                                                                                                    1. setting quality standards or performance requirements at a more or less onerous level.

                                                                                                                                                      1. A price-quality path may include—

                                                                                                                                                      2. incentives for a regulated supplier to maintain or improve its quality of supply, and those incentives may include (without limitation) any of the following:
                                                                                                                                                        1. penalties by way of a reduction in the supplier’s maximum prices or revenues based on whether, or by what amount, the supplier fails to meet the required quality standards or any performance requirements:
                                                                                                                                                          1. rewards by way of an increase in the supplier’s maximum prices or revenues based on whether, or by what amount, the supplier meets or exceeds the required quality standards or any performance requirements:
                                                                                                                                                            1. compensation schemes that set minimum standards of performance and require the supplier to pay prescribed amounts of compensation to consumers if it fails to meet those standards:
                                                                                                                                                              1. the use of schemes that rate or rank various aspects of the supplier’s performance in meeting the required quality standards or any performance requirements; and
                                                                                                                                                              2. performance requirements, including any of the following:
                                                                                                                                                                1. requirements to adopt a particular approach to risk management:
                                                                                                                                                                  1. requirements in relation to the condition of assets and remaining asset life:
                                                                                                                                                                    1. requirements to make particular types of investment:
                                                                                                                                                                      1. requirements to provide information about any investments planned for a particular period:
                                                                                                                                                                        1. requirements to deliver particular outputs:
                                                                                                                                                                          1. requirements to consult the Commission about certain kinds of investments and investment decisions:
                                                                                                                                                                            1. requirements to adopt asset management policies and practices:
                                                                                                                                                                              1. reporting requirements, including—
                                                                                                                                                                                1. to whom reports must be made; and
                                                                                                                                                                                  1. the timing of reports; and
                                                                                                                                                                                    1. special reporting requirements in asset management plans, if the regulated supplier fails to meet the quality standards or other performance requirements; and
                                                                                                                                                                                      1. any other matters relating to reporting, including requirements for additional information:
                                                                                                                                                                                      2. requirements that any disclosed information, or any information from which disclosed information is derived, be verified by statutory declaration or certified (in the form specified by the Commission) as true and accurate:
                                                                                                                                                                                        1. requirements to undertake cost-benefit analysis before specified projects are begun:
                                                                                                                                                                                          1. requirements relating to consultation and engagement with consumers:
                                                                                                                                                                                            1. requirements based on comparative benchmarking of efficiency.

                                                                                                                                                                                            2. A regulatory period must be at least 3 years but not more than 6 years.

                                                                                                                                                                                            Compare
                                                                                                                                                                                            Notes
                                                                                                                                                                                            • Schedule 7 clause 23: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                            24Other matters relating to price-quality paths

                                                                                                                                                                                            1. Quality standards and performance requirements may be prescribed in any way the Commission considers appropriate (such as targets, bands, formulas, or timetables for responsiveness to consumers).

                                                                                                                                                                                            2. A price-quality path does not apply to a regulated supplier until the date specified in the relevant section 52P determination.

                                                                                                                                                                                            Notes
                                                                                                                                                                                            • Schedule 7 clause 24: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                            25Wash-up mechanism for revenues specified in price-quality paths

                                                                                                                                                                                            1. This clause applies when the Commission specifies, in the price-quality paths for a regulatory period, the maximum or minimum revenues that a regulated supplier may recover.

                                                                                                                                                                                            2. The Commission may, in calculating the maximum or minimum revenues, apply a wash-up mechanism that provides for any over-recovery or under-recovery of revenue by the regulated supplier during the previous regulatory period (if applicable) to be applied in a manner that is equivalent in present-value terms (as calculated in the manner that the Commission thinks fit) over 1 or more future regulatory periods.

                                                                                                                                                                                            3. The reference to previous regulatory period in subclause (2) includes any period that applied under the Watercare charter made under Part 4 of the Local Government (Water Services Preliminary Arrangements) Act 2024.

                                                                                                                                                                                            Compare
                                                                                                                                                                                            Notes
                                                                                                                                                                                            • Schedule 7 clause 25: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                            26Smoothing revenues and prices

                                                                                                                                                                                            1. This clause applies when the Commission specifies maximum or minimum prices or maximum or minimum revenues for the purposes of clause 23(2)(b).

                                                                                                                                                                                            2. The Commission may calculate the maximum or minimum price or revenue in a manner that is equivalent in present-value terms (as calculated in the manner that the Commission thinks fit) over 2 or more regulatory periods (for example, by altering depreciation) if, in the Commission’s opinion, it is necessary or desirable to do so for either or both of the following reasons:

                                                                                                                                                                                            3. to provide for the ability of a regulated supplier to obtain finance:
                                                                                                                                                                                              1. to minimise price shocks to consumers.

                                                                                                                                                                                                Compare
                                                                                                                                                                                                Notes
                                                                                                                                                                                                • Schedule 7 clause 26: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                27Reopening price-quality path if input methodology changes as result of appeal

                                                                                                                                                                                                1. The Commission must reopen a price-quality path, and make a new price-quality path by amending the relevant section 52P determination in accordance with section 52Q, if—

                                                                                                                                                                                                2. an input methodology changes as a result of an appeal under section 52Z; and
                                                                                                                                                                                                  1. had the changed input methodology applied at the time the price-quality path was set, it would have resulted in a materially different path being set.

                                                                                                                                                                                                    1. When making a new price-quality path under subclause (1), the Commission must apply claw-back.

                                                                                                                                                                                                    Compare
                                                                                                                                                                                                    Notes
                                                                                                                                                                                                    • Schedule 7 clause 27: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                    28No other reopening of price-quality path

                                                                                                                                                                                                    1. Except as provided in clause 27, the Commission must not reopen a price-quality path within a regulatory period on the grounds that an input methodology is made or changes.

                                                                                                                                                                                                    Compare
                                                                                                                                                                                                    Notes
                                                                                                                                                                                                    • Schedule 7 clause 28: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                    7Additional matters for input methodologies

                                                                                                                                                                                                    29When Commission must or may determine input methodologies

                                                                                                                                                                                                    1. The Commission—

                                                                                                                                                                                                    2. must determine input methodologies in respect of information disclosure regulation and price-quality regulation (in accordance with clause 32 in the case of initial input methodologies); and
                                                                                                                                                                                                      1. may determine input methodologies in respect of quality regulation.

                                                                                                                                                                                                        1. Subclause (1)(a) does not limit section 57P (which provides an exception for periods before the relevant date).

                                                                                                                                                                                                        Notes
                                                                                                                                                                                                        • Schedule 7 clause 29: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                        30How input methodologies apply

                                                                                                                                                                                                        1. An input methodology relating to the supply of water services must be applied—

                                                                                                                                                                                                        2. by each relevant regulated supplier in accordance with the relevant section 52P determination; and
                                                                                                                                                                                                          1. in relation to an input methodology that is not specified in a section 52P determination (see clause 31(5)), by each supplier to which the relevant input methodology applies; and
                                                                                                                                                                                                            1. by the Commission in recommending, deciding, or determining—
                                                                                                                                                                                                              1. how regulation under Part 4 of this Act should apply to water services; or
                                                                                                                                                                                                                1. the prices or quality standards applying to water services.

                                                                                                                                                                                                                2. However, subclause (1)(c) does not apply to a section 52P determination for information disclosure regulation or price-quality regulation if the determination is made before the initial input methodology has been determined for that regulation in accordance with clause 32.

                                                                                                                                                                                                                3. This clause applies instead of section 52S in relation to supplying water services.

                                                                                                                                                                                                                Notes
                                                                                                                                                                                                                • Schedule 7 clause 30: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                31Additional matters covered by input methodologies

                                                                                                                                                                                                                1. In addition to the matters set out in section 52T(1), the input methodologies relating to water services must include, to the extent applicable to the type of regulation under consideration, methodologies for capital expenditure proposals, including the following:

                                                                                                                                                                                                                2. requirements that the regulated suppliers must meet, including the scope and specificity of information required, the extent of independent verification, assurance, and audit, and the extent of consultation and agreement with other parties; and
                                                                                                                                                                                                                  1. the criteria the Commission will use to evaluate capital expenditure proposals; and
                                                                                                                                                                                                                    1. time frames and processes for evaluating capital expenditure proposals, including what happens if the Commission does not comply with those time frames.

                                                                                                                                                                                                                      1. Section 52T(2)(a) applies to the additional matters in subclause (1).

                                                                                                                                                                                                                      2. In determining an input methodology, the Commission may have regard to the scale, complexity, and risk profile of each regulated supplier (or a class of regulated supplier), or the type of water services being provided by each supplier (or class of supplier), in respect of which the methodology will apply (for example, by specifying the matters referred to in section 52T(1) and subclause (1) in a greater or lesser level of detail).

                                                                                                                                                                                                                      3. An input methodology may relate to all regulated suppliers or to a class of regulated suppliers or to 1 or more regulated suppliers.

                                                                                                                                                                                                                      4. If the Commission determines an input methodology that is not specified in a section 52P determination, the Commission must ensure that the input methodology—

                                                                                                                                                                                                                      5. states clearly that it is an input methodology of the sort referred to in clause 30(1)(b); and
                                                                                                                                                                                                                        1. specifies the suppliers to which it applies; and
                                                                                                                                                                                                                          1. specifies the water services in respect of which it applies; and
                                                                                                                                                                                                                            1. sets out any time frames that must be complied with or that apply; and
                                                                                                                                                                                                                              1. is consistent with Part 4 of this Act.

                                                                                                                                                                                                                                1. Section 52T(3) does not apply to water services.

                                                                                                                                                                                                                                Notes
                                                                                                                                                                                                                                • Schedule 7 clause 31: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                32Timing of initial input methodologies for information disclosure and price-quality regulation

                                                                                                                                                                                                                                1. The Commission must determine initial input methodologies relating to information disclosure regulation under subpart 12 of Part 4 of this Act before the relevant date.

                                                                                                                                                                                                                                2. If 1 or more suppliers become subject to price-quality regulation under subpart 12 of Part 4 of this Act before the tenth anniversary of the commencement of this clause, the Commission must determine initial input methodologies relating to that regulation before the relevant date.

                                                                                                                                                                                                                                3. In this clause, relevant date means—

                                                                                                                                                                                                                                4. the tenth anniversary of the commencement of this clause:
                                                                                                                                                                                                                                  1. an earlier or a later date specified in the Gazette under subclause (4).

                                                                                                                                                                                                                                    1. The following apply for the purposes of subclause (3)(b):

                                                                                                                                                                                                                                    2. the Minister may specify a date by notice in the Gazette if the Commission agrees to the date:
                                                                                                                                                                                                                                      1. the Minister and the Commission may agree to different dates for different types of regulation and for different regulated suppliers or groups of regulated suppliers.

                                                                                                                                                                                                                                        1. Clause 29(1)(a) is subject to this clause.

                                                                                                                                                                                                                                        Notes
                                                                                                                                                                                                                                        • Schedule 7 clause 32: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                        33Commission may determine initial input methodologies relating to quality regulation after other methodologies

                                                                                                                                                                                                                                        1. The Commission may, in respect of a regulated supplier (or a class of regulated suppliers), determine initial input methodologies relating to quality regulation of water services, at any time after the initial input methodologies relating to information disclosure regulation or price-quality regulation of that supplier (or those suppliers) are determined under clause 32.

                                                                                                                                                                                                                                        Notes
                                                                                                                                                                                                                                        • Schedule 7 clause 33: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                        34Commission may seek court order for contravention of input methodology set outside of determination

                                                                                                                                                                                                                                        1. Sections 87 to 87C apply to a regulated supplier in respect of a contravention of an input methodology of the sort referred to in clause 30(1)(b) as if it were a contravention of a type of regulation under Part 4 of this Act that is referred to in those sections.

                                                                                                                                                                                                                                        Notes
                                                                                                                                                                                                                                        • Schedule 7 clause 34: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                        8Miscellaneous

                                                                                                                                                                                                                                        35Consultation on section 52P determination

                                                                                                                                                                                                                                        1. The Commission must consult interested parties before making a section 52P determination relating to water services.

                                                                                                                                                                                                                                        2. However, section 52Q applies to an amendment of a section 52P determination relating to water services (in particular, the determination may be amended in a non-material way without prior consultation).

                                                                                                                                                                                                                                        Notes
                                                                                                                                                                                                                                        • Schedule 7 clause 35: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                        36Monitoring compliance with certain requirements

                                                                                                                                                                                                                                        1. Subclause (2) applies for the purpose of monitoring compliance with any requirement imposed by this schedule or by a section 52P determination made for the purposes of subpart 12 of Part 4 of this Act.

                                                                                                                                                                                                                                        2. The Commission may, in addition to exercising its powers under section 98, issue a written notice to a regulated supplier requiring it to provide any or all of the following:

                                                                                                                                                                                                                                        3. a written statement as to whether the supplier has complied with the requirement:
                                                                                                                                                                                                                                          1. a report on the written statement that is signed by a person that the Commission considers to be a suitably qualified and experienced independent expert in accordance with any form specified by the Commission:
                                                                                                                                                                                                                                            1. sufficient information to enable the Commission to properly determine whether all applicable requirements have been complied with:
                                                                                                                                                                                                                                              1. a certificate, in the form specified by the Commission and signed by at least 1 board member of the supplier, or, if there is no board, the person who operates the supplier, confirming the truth and accuracy of any information provided under this clause.

                                                                                                                                                                                                                                                1. Subclause (4) applies for the purpose of monitoring a regulated supplier’s performance against a revenue threshold.

                                                                                                                                                                                                                                                2. The Commission may, in addition to exercising its powers under section 98, issue a written notice to a regulated supplier requiring it to provide a written statement as to whether the supplier has recovered revenues in accordance with a revenue threshold (and, if not, a statement of reasons why it has not recovered revenues within the threshold).

                                                                                                                                                                                                                                                3. The supplier must comply with a notice issued under subclause (2) or (4) within the time frame, and in the manner, specified in the notice.

                                                                                                                                                                                                                                                Compare
                                                                                                                                                                                                                                                Notes
                                                                                                                                                                                                                                                • Schedule 7 clause 36: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                                37Information sharing with regulatory agencies in relation to water services

                                                                                                                                                                                                                                                1. The Commission may provide a regulatory agency with any information, or a copy of any document, that it—

                                                                                                                                                                                                                                                2. holds in relation to performing or exercising its functions, duties, or powers under this Act; and
                                                                                                                                                                                                                                                  1. considers may assist the regulatory agency in performing or exercising the regulatory agency’s functions, duties, or powers in relation to water services.

                                                                                                                                                                                                                                                    1. A regulatory agency may provide the Commission with any information, or a copy of any document, that it—

                                                                                                                                                                                                                                                    2. holds in relation to performing or exercising its functions, duties, or powers under or in relation to any legislation; and
                                                                                                                                                                                                                                                      1. considers may assist the Commission in performing or exercising its functions, duties, or powers under this Act in relation to water services.

                                                                                                                                                                                                                                                        1. If subclause (1) or (2) applies, the Commission or the regulatory agency (as the case may be) may impose conditions that it thinks fit relating to providing the information or document, including conditions relating to—

                                                                                                                                                                                                                                                        2. the storage and use of, or access to, anything provided:
                                                                                                                                                                                                                                                          1. the copying, returning, or disposing of copies of any documents provided.

                                                                                                                                                                                                                                                            1. This clause applies—

                                                                                                                                                                                                                                                            2. despite anything to the contrary in any contract, deed, or document; but
                                                                                                                                                                                                                                                              1. subject to any legislation.

                                                                                                                                                                                                                                                                1. In this clause, regulatory agency means any of the following:

                                                                                                                                                                                                                                                                2. the Water Services Authority—Taumata Arowai:
                                                                                                                                                                                                                                                                  1. the Department of Internal Affairs, including any statutory officer who carries out work for that Department:
                                                                                                                                                                                                                                                                    1. the Ministry for the Environment, including any statutory officer who carries out work for that Ministry:
                                                                                                                                                                                                                                                                      1. the Ministry of Business, Innovation, and Employment, including any statutory officer who carries out work for that Ministry:
                                                                                                                                                                                                                                                                        1. the Auditor-General:
                                                                                                                                                                                                                                                                          1. a regional council or a unitary authority (within the meaning of section 5 of the Local Government Act 2002).

                                                                                                                                                                                                                                                                            Notes
                                                                                                                                                                                                                                                                            • Schedule 7 clause 37: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                                                            38Commission may use or respond to information

                                                                                                                                                                                                                                                                            1. In performing its functions under this Act in relation to water services, the Commission may do any of the following:

                                                                                                                                                                                                                                                                            2. consider, summarise, analyse, or use any information that it considers relevant:
                                                                                                                                                                                                                                                                              1. provide information to the public about any of its activities under paragraph (a):
                                                                                                                                                                                                                                                                                1. make comments on any information provided publicly by regulated suppliers or the Water Services Authority—Taumata Arowai under any legislation dealing with water services.

                                                                                                                                                                                                                                                                                  1. This clause does not limit other powers in this or any other Act.

                                                                                                                                                                                                                                                                                  Compare
                                                                                                                                                                                                                                                                                  Notes
                                                                                                                                                                                                                                                                                  • Schedule 7 clause 38: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                                                                  1Overview

                                                                                                                                                                                                                                                                                  1. This schedule sets out additional matters for the purposes of subpart 12 of Part 4 of this Act (which relates to the regulation of water services).

                                                                                                                                                                                                                                                                                  2. This schedule also contains provisions about ring-fencing water services revenue.

                                                                                                                                                                                                                                                                                  Notes
                                                                                                                                                                                                                                                                                  • Schedule 7 clause 1: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).

                                                                                                                                                                                                                                                                                  2Interpretation in subpart 12 of Part 4 of this Act and this schedule

                                                                                                                                                                                                                                                                                  1. In subpart 12 of Part 4 of this Act and this schedule, unless the context otherwise requires,—

                                                                                                                                                                                                                                                                                    consumer—

                                                                                                                                                                                                                                                                                    1. means a person who consumes, uses, is provided with, or benefits from the provision of, a water service; and
                                                                                                                                                                                                                                                                                      1. includes a person who is liable to pay a serviceability charge under section 88 of the Local Government (Water Services) Act 2025

                                                                                                                                                                                                                                                                                        local government water service supplier—

                                                                                                                                                                                                                                                                                        1. means either of the following:
                                                                                                                                                                                                                                                                                          1. a local authority (within the meaning of section 5 of the Local Government Act 2002):
                                                                                                                                                                                                                                                                                            1. a water organisation:
                                                                                                                                                                                                                                                                                            2. does not include the Chatham Islands Council (but that council may be declared to be regulated by an Order in Council under section 57L)

                                                                                                                                                                                                                                                                                              regulated supplier, in relation to a water service, means—

                                                                                                                                                                                                                                                                                              1. a local government water service supplier to which section 57D(1) applies; or
                                                                                                                                                                                                                                                                                                1. a supplier of the water service that is declared to be regulated by an Order in Council under section 57L

                                                                                                                                                                                                                                                                                                  split decision-making model means an arrangement for providing water services where a local government water service supplier makes 1 or more, but not all, decisions about capital and operating expenditure on a regulated water service or the level of charges or revenue recovery for a regulated water service

                                                                                                                                                                                                                                                                                                    water organisation has the meaning given in section 4 of the Local Government (Water Services) Act 2025.

                                                                                                                                                                                                                                                                                                    1. Any term or expression that is defined in the Water Services Act 2021 and used, but not defined, in this clause has the same meaning as in that Act.

                                                                                                                                                                                                                                                                                                    Notes
                                                                                                                                                                                                                                                                                                    • Schedule 7 clause 2: inserted, on , by section 25 of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).