Clause 11 sets out an overview of Part 2. Part 2 provides for the regulation of the price and quality of water infrastructure services in markets where there is little or no competition and little or no likelihood of a substantial increase in competition.

Clause 12 sets out in more detail the purpose of Part 2.

Clause 13 sets out defined terms that are used only or primarily in Part 2.

Clause 14 requires a regulated water services provider to comply with the requirements of Part 2 that apply to the provider, and every section 15 determination that applies to the provider.

Clause 15 is a key clause. It provides for the Commission to make determinations specifying how information disclosure regulation, quality regulation, and price-quality regulation apply to regulated water services providers. A determination must—

• specify the regulated water services provider to which it applies; and

• specify the water services infrastructure in respect of which it applies; and

• set out, for each type of regulation, the requirements that apply to each regulated water services provider; and

• set out time frames that must be complied with; and

• specify any input methodologies that apply; and

• be consistent with the other provisions of Part 2.

Clause 15 gives the Commission considerable flexibility in determining the contents and scope of its determinations.

Clause 16 provides for the amendment of section 15 determinations.

Clause 17 enables the Commission to exempt any person or class of person from an obligation to make information or a class of information publicly available, on the grounds of commercial sensitivity.

Clause 18 requires the Commission to determine initial input methodologies relating to information disclosure and price-quality regulation of water infrastructure services no later than 1 July 2026. The Commission may determine further input methodologies after that date.

Clause 19 requires the Commission to make initial section 15 determinations,—

• in relation to information disclosure, no later than 1 July 2027; and

• in relation to quality regulation, no later than the start of the first regulatory period; and

• in relation to price-quality regulation, no later than the start of the second regulatory period.

Clause 20 describes the regulatory periods. The first regulatory period is a period of 3 years starting on the implementation date (the later of 1 July 2027 and a date specified by Order in Council). The duration of subsequent regulatory periods must be determined by the Commission but must be no longer than 6 years.

Clause 21 empowers the changing of the implementation date by Order in Council, subject to specified limitations.

Clause 22 similarly empowers the changing of other dates by Order in Council, subject to specified limitations.

Clause 23 specifies the matters the Minister must take into account when deciding whether to recommend a change to the implementation date or other dates specified in the Bill, and some limitations on that power.

Clause 24 sets out the purpose of having input methodologies. It is to promote certainty for water services providers and consumers in relation to the rules, requirements, and processes applying to the regulation, or proposed regulation, of water infrastructure services under Part 2.

Clause 25 requires the Commission to determine at least 1 input methodology for each of information disclosure regulation and price-quality regulation. The clause also empowers but does not require the Commission to determine input methodologies in respect of quality regulation.

Clause 26 describes how input methodologies are to be applied by relevant regulated water services providers and the Commission, respectively.

Clause 27 specifies the matters to be covered by input methodologies to the extent relevant in each case. In general terms, they are matters relating to—

• the cost of capital; and

• the valuation of assets; and

• the allocation of common costs; and

• the treatment of taxation.

Input methodologies must also deal with regulatory processes and rules, such as the specification and definition of prices and identifying circumstances in which price-quality paths may be reconsidered within a regulatory period. Clause 27 also contains specific rules dealing with input methodologies for capital expenditure projects, and general matters that all input methodologies need to include.

Clause 28 sets out a process that the Commission must follow in determining input methodologies.

Clause 29 relates to the status of an input methodology, an amendment to it, and a revocation of it as secondary legislation.

Clause 30 requires the Commission to follow the processes set out in clause 28 whenever it proposes to amend or revoke an input methodology.

Clause 31 requires the Commission to review an input methodology at least once every 7 years.

Clause 32 sets out the purpose of information disclosure regulation. It is to ensure that sufficient information is readily available to interested persons to assess whether the purpose of Part 2 is being met.

Clause 33 describes the effect of being subject to information disclosure regulation. It is, in general terms, a requirement to—

• publicly disclose information in accordance with the information disclosure requirements set out in the relevant section 15 determination:

• supply the Commission with all the publicly released information within 5 working days of the date of its public release:

• supply other specified information to the Commission in accordance with any written notice issued by the Commission.

Clause 34 requires a section 15 determination relating to information disclosure to set out, among other matters,—

• the information to be disclosed; and

• the manner in which the information is to be disclosed; and

• the form of the disclosure; and

• when, and for how long, the information must be disclosed; and

• any other methodologies that are required in the preparation or compilation of the information.

Clause 35 enables a section 15 determination to require the disclosure of information in a case where a regulated water services provider provides other goods and services that are not regulated by Part 2, including—

• consolidated financial statements for all businesses:

• consolidated financial statements for the supply of all non-regulated goods and services in aggregate:

• a reconciliation of the information in the 2 sets of consolidated financial statements:

• certain specified information about the financing all businesses of the provider and the supply of all goods and services provided by the provider.

Clause 36 enables a person who is required to provide copies of statements and information to the public to impose a reasonable charge to cover the costs of supplying the copies.

Clause 37 sets out the purpose of quality regulation. It is to regulate the quality and performance (other than in relation to prices) of water infrastructure services provided by regulated water services providers.

Clause 38 describes the effect of being subject to quality regulation. The effect is that regulated water services providers to which a section 15 determination relating to quality regulation applies must apply the quality paths set by the Commission in respect of all water infrastructure services that are—

• supplied by the supplier; and

• specified in the determination.

Clause 39 requires a section 15 determination relating to quality regulation to specify quality paths that apply to each regulated water services provider. A quality path must specify—

• the regulatory period to which it applies:

• the quality standards that must be met by a regulated water services provider:

• the date (or dates) on which the quality path (or any part of it) takes effect:

• the date or dates by which compliance with the quality path must be demonstrated.

A quality path may include—

• incentives for a regulated water services provider to maintain or improve its quality of supply; and

• performance standards covering a range of specified matters.

Clause 40 sets out the purpose of price-quality regulation. It is to regulate the price and quality of water infrastructure services provided by regulated water services providers.

Clause 41 describes the effect of being subject to price-quality regulation. The effect is that regulated water services providers to which a section 15 determination relating to price-quality regulation applies must apply the price-quality paths set by the Commission in respect of all water infrastructure services that are—

• supplied by the provider; and

• specified in the determination.

Clause 42 requires a section 15 determination relating to price-quality regulation to specify price-quality paths that apply to each regulated water services provider. A price-quality path must specify—

• the regulatory period to which it applies:

• the maximum price that a regulated water services provider may charge:

• the maximum revenues that a regulated water services provider may recover:

• the quality standards that a regulated water services provider must meet:

• the date or dates on which the price-quality path (or any part of it) takes effect:

• the date or dates by which compliance with the price-quality path must be demonstrated.

A price-quality path may include—

• incentives for a regulated water services provider to maintain or improve its quality of supply; and

• performance requirements covering a range of specified matters.

Clause 43 provides that, in a case where the price-quality paths for a regulatory period specify the maximum revenues that a regulated water services provider may recover, the Commission may apply a mechanism that provides for any under-recovery or over-recovery of revenues (a wash-up mechanism) to be applied over 1 or more future regulatory periods.

Clause 44 applies when the Commission specifies maximum prices or maximum revenues for the purposes of clause 42(2)(b). The Commission may calculate the maximum price or revenue over 2 or more regulatory periods if the Commission considers that necessary or desirable to provide for the financeability of a regulated water services provider or to minimise price shocks to consumers.

Clause 45 requires the Commission to make a new section 15 determination before the end of each regulatory period specifying the price-quality paths that will apply for the following regulatory period.

Clause 46 specifies what happens to a price-quality path where there is a change of input methodology. The Commission must not reopen a price-quality path except in 2 specified circumstances.

Clause 47 empowers the Commission to review (either on its own initiative or at the request of the Minister) how 1 or more water infrastructure services are regulated under Part 2, if the Commission has reasonable grounds to consider that those services should no longer be subject to 1 or more of the types of regulation provided for in subpart 4, 5, or 6 of Part 2. The Commission must make a recommendation to the Minister after a review.

Clause 48 empowers the Commission to undertake reviews (either on its own initiative or at the request of the Minister) to determine whether 1 or more water services entities that are not subject to regulation under Part 2 should be subject to 1 or more of the types of regulation provided for in subpart 4, 5, or 6 of Part 2. The Commission must make a recommendation to the Minister after a review.

Clause 49 empowers the Commission to undertake reviews (either on its own initiative or at the request of the Minister) in relation to the timing of price-quality regulation. Specifically, the Commission can undertake reviews to determine whether price-quality regulation should apply to any regulated water services supplier from the start of the first regulatory period, or from the start of the second regulatory period.

Clause 50 gives the Minister the power to accept or reject a recommendation from the Commission under clauses 47 to 49, or to ask that it be reconsidered by the Commission. If the Minister accepts the recommendation, clause 50 requires the Commission (in some cases) to take action to implement it.

Clause 51 requires the Commission to review any funding and pricing plan made available by the chief executive of a regulated water services provider.

Clause 52 empowers the Commission to direct the board of a regulated water services provider to reconsider a plan.

Clause 53 requires the board of a regulated water services provider to comply with a direction it receives from the Commission under clause 52.

Clause 54 empowers the designation for the purposes of Part 2 of a water services entity that is not a statutory entity. The designation is made by Order in Council on the recommendation of the Minister. The effect of the designation is that the water services entity, through the act of designation, becomes a regulated water services provider.

Clause 55 provides that the Minister may recommend such a designation only after receiving a recommendation from the Commission under clause 48.

Clause 56 lists the matters that must be specified in the designation order.

Clause 57 requires the duration of the order, which must not exceed 10 years, to be specified in the order.

Clause 58 describes the process for amending or revoking a designation order.

Clause 62 empowers the designation of a water services entity that is not a statutory entity to be designated for the purposes of Part 3. The designation is made by Order in Council on the recommendation of the Minister. The effect of the designation is that a designated water services entity, through the act of designation, becomes a regulated water services provider.

Clause 63 provides that the Minister may recommend such a designation only after receiving a recommendation from the Commission. In deciding whether to make a recommendation the Minister may—

• accept or reject the Commission’s recommendation:

• request that the Commission reconsider any matter:

• make any other decision that the Minister considers is in the public interest.

Clause 64 lists the matters that the Commission must consider in deciding whether to make a recommendation.

Clause 65 sets out the process that the Commission must follow before making a recommendation under clause 64. The process involves consultation with water consumers or their representatives and operators of the relevant water services entity.

Clause 66 lists the matters that must be specified in the designation order.

Clause 67 requires the duration of the order, which must not exceed 10 years, to be specified in the order.

Clause 68 describes the process for amending or revoking a designation order.

Clause 69 requires the Commission to make, not later than 1 July 2027, a service quality code. The code relates to the service quality of water infrastructure services provided by regulated water services providers.

Clause 70 sets out the matters that must be specified in the service quality code.

Clause 71 requires regulated water services providers to comply with the code.

Clause 72 sets out the process for making or amending or revoking the service quality code.

Clause 73 requires a regulated water services provider or a drinking water supplier to—

• provide prescribed information to consumers; and

• establish, maintain and administer a consumer complaints process; and

• report annually to the Commission on its consumer complaints process.

Clause 74 enables a consumer who is dissatisfied with the outcome of a complaint dealt with using a consumer complaints process to request that the service provider for the consumer dispute resolution service provide dispute resolution services to review the complaint. Clause 74(2) lists the circumstances in which the service provider may decide to take no action or no further action on a complaint.

Clause 75 requires the Commission to monitor compliance with the complaints process set out in clauses 73 and 74.

Clause 76 provides that the consumer dispute resolution service for the resolution of consumer protection disputes (including disputes about the interpretation and application of the service quality code) is the dispute resolution service—

• approved by the Minister under Schedule 2; and

• that the Minister declares under Schedule 2 to be the consumer dispute resolution service for the purposes of Part 3; and

• whose provider is approved by the Minister.

Clause 77 provides that determinations made under the consumer dispute resolution service are binding on the relevant regulated water supplier or drinking water supplier. However, under clause 78, a consumer may appeal to the court against a determination, and the court may confirm, modify, or reverse the determination.

Clause 79 sets out rules of procedure to apply on an appeal under clause 78.

Clause 80 requires each party to a dispute that is referred to the consumer dispute resolution service to comply with the rules of the service. The court may require a person who is a party to a dispute to comply with the rules of the service or to comply with the terms of a binding settlement or determination made under the rules of the service, or both. In certain specified circumstances, the court may modify the terms of a binding settlement or determination. An order requiring money to be paid under a binding settlement may be enforced as if it were a judgment of the court.

Clause 81 requires the Commission to review the consumer dispute resolution service, using the process and in accordance with the timetable set out in Schedule 2.

Clause 82 requires a service provider to notify Taumata Arowai if, during the course of providing dispute resolution services, the provider becomes aware of an actual or a possible serious risk to public health. Clause 82 also requires the sharing of information between various entities in an agreed manner.

Clause 83 sets out an outline of subpart 1 of Part 4. It states that the following remedies are available under subpart 1:

• a pecuniary penalty order (on application by the Commission only):

• a compensatory order:

• an injunction.

Clause 84 states when the court may order a person to pay a pecuniary penalty to the Crown. The court may impose a pecuniary penalty if it is satisfied that the person has—

• contravened an information disclosure requirement; or

• contravened a quality requirement; or

• contravened a price-quality requirement; or

• contravened a code made under the Bill; or

• attempted to contravene or been involved in a contravention of any of the above-listed requirements.

Clause 85 sets the maximum pecuniary penalty that may be ordered for a contravention, attempted contravention, or involvement in a contravention as—

• $500,000, for an individual; and

• $5 million, in any other case.

Clause 86 sets out examples of the matters to which the court must have regard in determining the appropriate pecuniary penalty in any particular case.

Clause 87 empowers the court to order that any pecuniary penalty must be applied first to pay the Commission’s actual costs.

Clause 88 provides that if the court orders a person to pay a pecuniary penalty, it may, in addition, order the person to pay compensation to any person who has suffered, or is likely to suffer, loss or damage as a result of the contravention.

Clause 89 specifies the terms under which a compensation order must be made.

Clause 90 empowers the court to grant various kinds of injunctions.

Clause 91 sets out the criteria that the court must apply in order to issue a restraining injunction.

Clause 92, which is based on a similar provision in the Commerce Act 1986, provides that the court may not require the Commission to give an undertaking as to damages, if the Commission applies for an interim injunction.

Clause 93 provides that a proceeding under subpart 1 is a civil proceeding and that the rules of evidence and procedure for civil proceedings apply (including the standard of proof).

Clause 94 requires proceedings under subpart 1 to be commenced within 3 years after the matter giving rise to the contravention, attempted contravention, or involvement in the contravention was discovered or ought reasonably to have been discovered. However, an application for compensation under clause 88 must be made within 1 year of the relevant pecuniary penalty order.

Clause 95 allows the court to grant more than 1 civil liability remedy for the same conduct (for example, a compensation order and a pecuniary penalty may be imposed for the same conduct). However, clause 96 provides that only 1 pecuniary penalty order may be made for the same conduct, and clause 97 provides that no person can be ordered to pay a pecuniary penalty and be liable to a fine or imprisonment for the same conduct.

Clause 98 enables the court to make an order requiring a regulated water services provider to comply with an information disclosure requirement that applies to the provider.

Clause 99 creates an offence of intentionally contravening an information disclosure requirement or failing to comply with an order made under clause 90 or 98 within the required time.

Clause 100 creates an offence of intentionally contravening a quality requirement in relation to the supply of water infrastructure services or failing to comply with an order made under clause 90 within the required time.

Clause 101 creates an offence of intentionally contravening a price-quality requirement in respect of water infrastructure services or failing to comply with an order made under clause 90 within the required time.

Clause 102 creates an offence of intentionally contravening the service quality code or failing to comply with an order made under clause 90.

The penalties for offences against any of clauses 99 to 102 are,—

• in the case of an individual, a fine not exceeding $200,000; and

• in any other case, a fine not exceeding $1 million.

Clause 103 sets out an overview of subpart 3. The subpart sets out orders that may be made specifically for breaches of Part 3 (which relates to consumer protection) and procedural matters relating to infringement offences.

Clause 104 empowers the court, if it is satisfied that a person has, without reasonable excuse, breached the service quality code, to order 1 or both of the following:

• the disclosure of information to the public or to a particular person or class of persons:

• the publication of corrective statements.

Clause 105 sets out a general menu of orders that the court may make if satisfied that a person (person X) has breached the quality service code. Those are—

• an order directing person X to refund money or return property:

• an order requiring person X to pay another person the amount of any loss or damage suffered by that person as a result of conduct by person X:

• an order directing person X to supply a service to another person, at person X’s own expense:

• an order declaring all or part of a contract between person X and another person to be void:

• an order varying a contract or a related collateral arrangement between person X and another person.

Clause 106 empowers the court to make an order directing a person, if they have breached the quality service code, to supply a service to a consumer at the person’s own expense.

Clause 107 deals with machinery provisions applying to proceedings for additional remedies under clauses 104 to 106.

Clauses 108 to 117 set out standard machinery provisions relating to infringement offences. It is intended that infringement offences will be prescribed for breaches of the service quality code and other breaches of Part 3.

Those clauses relate to—

• interpretation (clause 108):

• proceedings for infringement offences (clause 109):

• who may issue infringement notices (clause 110):

• when infringement notices may be issued (clause 111):

• the revocation of an infringement notice before payment is made (clause 112):

• what infringement notices must contain (clause 113):

• how infringement notices may be issued to a person (clause 114):

• payment of infringement fees (clause 115):

• reminder notices (clause 116):

• the relationship between infringement offences and other offences (clause 117).

Clause 118 gives a regulated water services provider or any other person a general right to appeal to the court against any determination under the Act (except a section 15 determination that relates to information disclosure or quality regulation, or an input methodology determination under subpart 3 of Part 2).

Clause 119 gives a person who participated in an input methodology determination and who, in the opinion of the court, has a significant interest in the matter, a right to appeal to the court against the determination.

Clause 120 describes the process for bringing and determining appeals under clause 119.

Clause 121 prohibits the court from staying the application of any input methodology pending the final determination of any appeal.

Clause 122 sets out the jurisdiction of the High Court in relation to enforcement matters under Part 4.

Clause 123 similarly sets out the jurisdiction of the District Court.

Clause 124 defines “involvement in a contravention” for the purposes of the Bill.

Clause 125 sets out rules governing the interrelationship between Part 4 and subpart 5 of Part 2 of the Contract and Commercial Law Act 2017 (which relates to illegal contracts).

Clause 126 inserts a rule governing the enforceability of contracts that if entered into would contravene a civil liability provision, by providing that the enforceability of other provisions is not affected.

Clause 127 provides for the appointment of a Water Services Commissioner on the recommendation of the responsible Minister.

Clause 128 sets out the prerequisites that must be satisfied in order for a person to be appointed as the Water Services Commissioner. The responsible Minister may only recommend the appointment if the person is already a member of the Commission, and, in the opinion of the Minister, is qualified for appointment. Clause 128(2) provides that a person is qualified for appointment by virtue of that person’s knowledge of or experience in the water services industry or any other industry, commerce, economics, law, accountancy, public administration, or consumer affairs.

Clause 129 sets out further machinery provisions relating to the removal of the Water Services Commissioner from office, the effect of the expiry of their term of office, and which provisions of the Crown Entities Act 2004 apply in relation to the Water Services Commissioner.

Clause 130 deals with what functions, duties, and powers of the Commission under the Bill can be dealt with by the Water Services Commissioner acting alone or with 2 or more other members of the Commission.

Clause 131 confers on the Water Services Commissioner, when acting alone, the authority to perform the Commission’s functions, duties, and powers.

Clause 132 sets out further machinery provisions that apply when the Water Services Commissioner acts with 2 or more other members of the Commission.

Clause 133 deals with accountability for collective duties.

Clause 134 provides for a alternate member to act instead of the Water Services Commissioner in certain circumstances.

Clause 135 deals with delegation of functions, duties, or powers.

Clause 136 provides that certain provisions of Part 6 of the Commerce Act 1986 (relating to enforcement, remedies, and appeals) apply with any necessary modifications.

Clause 137 provides that certain provisions of Part 7 of the Commerce Act 1986 (a range of miscellaneous provisions) apply with any necessary modifications.

Clause 138 gives the Commission a range of powers in relation to monitoring and enforcement that apply in addition to any powers the Commission has in exercising its powers under the Bill, and under section 98 of the Commerce Act 1986.

Clause 139 provides that the Commission may use any information previously disclosed to it under the Bill or under the Commerce Act 1986 for the purposes of carrying out its functions and exercising its powers under Part 5.

Clause 140 empowers the making of regulations for the following purposes:

• providing for anything the Bill says may or must be provided for by regulations:

• prescribing infringement offences:

• prescribing fines and fees for those infringement offences:

• providing for anything incidental that is necessary for carrying out or giving full effect to the Bill.

Clause 141 empowers the making of regulations for a levy that must be paid by regulated water services providers relating to the operations of the Commission. The levy must be prescribed on the basis that the following costs should be met fully out of the levy:

• a portion of the costs of the Commission in performing or exercising its functions, powers, and duties under the Bill and any other enactment, where the size of the portion to be met by the levy is determined by the Minister:

• the costs of collecting the levy money.

Clause 142 empowers the making of regulations for a levy that must be paid by regulated water services providers and drinking water suppliers relating to consumer dispute resolution services.

Clause 143 relates to the recovery of fees and other money and provides that—

• any fees or other money payable to the Crown under the Bill or regulations, or under any permit granted under the Bill, is recoverable as money due to the Crown:

• all fees payable under the Bill or the regulations must be paid into a Departmental Bank Account, and all other money payable to the Crown under the Bill, or the regulations, or under any permit granted under the Bill, must be paid into a Crown Bank Account.

Clause 144 imposes a duty on the Commission, in the exercise of its powers under the Bill, to have regard to any economic policies of the Government that the Minister gives to the Commission in a written statement.

Clause 145 relates to incorporation by reference.

Clauses 146 to 153 repeal certain provisions of the Water Services Act 2021 relating to complaints procedures. Those provisions have been replaced by the complaints procedures set out in Part 3 of this Bill.

Schedule 1 contains transitional, savings, and related provisions.

Schedule 2 sets out various provisions relating to the consumer dispute resolution service established by Part 3.