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Manukau Water Indicative Pricing For 2008/09

Manukau City (7 April 2008) – Manukau Water Limited has announced its indicative price for water for its financial year beginning July 1, 2008.

The company is forecasting its water price will be $1.30 (gst inclusive) per 1,000 litres (1 cubic metre) from July 1, compared with $1.199 currently. The price change is due to increases in the Consumers Price Index (CPI) and a forecast rise in bulk water prices.

Watercare Services Limited, which supplies bulk water and wastewater services in the Auckland region, has indicated its water charges will rise 14% from July 1. This bulk cost makes up more than half of Manukau Water Limited’s overall costs, which it recovers from its customers.

Offsetting the bulk cost increase is the fact that Manukau Water Limited is focussing on containing its costs and becoming more efficient as a Council Controlled Organisation. In the parts of its business where it controls costs, Manukau Water Limited is aiming to keep any price increases to the rate of inflation as measured by the CPI. This is why, although it is facing increases of 14% in bulk water costs from July 1, the actual increase in prices to customers is forecast to be around 8.5%.

An average household in Manukau uses about 215 cubic metres of water a year, so after the forecast increase an average-size household will pay about 77 cents a day for water for all uses, or $5.38 a week.

The final water price will be set following confirmation by Watercare of its bulk water prices and discussion and ratification by Manukau Water Limited’s owner, Manukau City Council.

Manukau Water Limited’s wastewater price – which is a cost for removing and treating sewage and other contaminated water -- will be set following the completion of a public consultation on wastewater tariffs by the Council. Following that consultation, the way that Manukau Water Limited shares its costs among its various customer groups could change.

Currently most of Manukau Water Limited’s customers pay an annual fee for wastewater treatment, but the public consultation is considering all pricing options including a tariff that is partially based on the volume of water used. A change to a partially variable charge would increase the incentive for customers to conserve water, and thus minimise their water and wastewater costs. Manukau Water Limited forecasts its wastewater tariff will rise by around 11.5% from July 1. This is mainly due to a forecast 17.5% rise in bulk wastewater costs, although this is yet to be confirmed.

Manukau Water Limited chief executive Raveen Jaduram said the forecast increases are regrettable, but given the company operates as a cost recovery business there is little choice but to pass onto customers the price increases faced by the company.

“In the parts of the business that we control we have worked hard to manage costs and this is helping to minimise any price increases,” he said.

Manukau Water Limited has performed well against budgeted costs since it was formed as a Council Controlled Organisation 18 months ago. Its actual performance as a CCO is detailed in financial reports on its website (_ HYPERLINK "http://www.manukauwater.co.nz/" \o "http://www.manukauwater.co.nz/" _www.manukauwater.co.nz_).

Meanwhile, Manukau Water Limited has confirmed its Network Growth Charge (NGC) for the new financial year. The NGC means water and wastewater network upgrades that are identified and programmed in Manukau Water Limited’s Asset Management Plan are paid for by people who increase demand on the system, and do not put on existing customers or future generations.

The NGC funding principle is in line with the company’s customer research and feedback, which consistently shows that those who create demand should pay for it.

In February 2007 Manukau Water Limited signalled it would begin to recover through the NGC, a proportion of costs by Watercare Services Limited to fund growth-related capital investments in the region.

After consultation and discussions, the Company has arrived at $3,990 (gst exclusive) for its NGC within urban Manukau from 1 July 2008. The NGC for Beachlands/Maraetai will be $4,710.

The new NGC rates will be applied to all applications to connect to Manukau Water Limited’s water and/or wastewater network from 1 July, 2008, and for existing customers with large increases in demand. Further details are available from the website of Manukau Water Limited.

About Manukau Water

Manukau Water Limited is responsible for the management of the public water distribution and wastewater collection systems for the people of Manukau. The company serves approximately 338,000 people living in an area covering 552 square kilometres. It manages infrastructure assets worth nearly $1 billion.

Manukau Water Limited does not operate for the purpose of making a profit, but it is required to recover its costs from customers

ENDS

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