New Zealand's water sector is undergoing its most significant structural transformation in a generation. Under the Government's Local Water Done Well reforms, councils across the country are establishing new council-controlled organisations (CCOs) to deliver drinking water and wastewater services. These new entities are being governed by independent boards of directors — commercially experienced professionals who, for the first time, carry personal liability for the performance of water infrastructure that has been underinvested in for decades.

This is not a theoretical concern. Wellington just showed us what happens when the bill comes due.

The Wellington Wake-Up Call

In early February 2026, Wellington's Moa Point Wastewater Treatment Plant catastrophically failed. The lower floors of the facility flooded when sewage backed up in its 1.8km outfall pipe, sending 70 million litres of raw, untreated sewage per day into Cook Strait. Beaches along the capital's south coast were closed. The plant — operated by multinational Veolia — had not been fully compliant for a single month since August 2023.

Within days, Wellington Water's board chair Nick Leggett resigned, stating that "leadership carries responsibility" and that "crises like these undermine public trust in institutions." A government-ordered Crown Review is now examining the root causes. The chief executive of Wellington Water acknowledged the organisation may have missed early warning signs. Reports dating back to 2021 had flagged repeated breaches, equipment failures, and underperformance.

The timing is instructive. Wellington Water is due to be replaced by a new regional entity — Tiaki Wai — on 1 July 2026. The independent directors now joining that board are inheriting not just assets and infrastructure, but the consequences of decades of deferred maintenance and institutional complacency.

They are not alone.

A New World for Water Governance

Across the country, new water CCOs are standing up with independent boards who face a fundamentally different accountability environment than the council officers and elected representatives who preceded them:

Waikato Waters Ltd, chaired by Elena Trout, is the most complex CCO establishment in New Zealand — bringing together the water and wastewater services of six councils with $1.6 billion in assets. Operational handover begins 1 July 2026.

Tiaki Wai in Wellington will serve 432,000 people and inherit the fallout from the Moa Point disaster.

Northland has established a regional CCO covering Whangārei, Kaipara, and Far North districts, with a go-live of July 2027.

New Plymouth, Hamilton-Waikato (Iawai), and entities across Canterbury, Hawke's Bay, and the South Island are all at various stages of establishment.

As Garry Macdonald — a senior water sector advisor with over 40 years of infrastructure experience and a strategic advisor to Alimentary Systems — recently observed: "We're dealing with a new world in New Zealand. These directors will be wanting to know, what risks are you taking off our plate?"

He's right. The governance landscape has shifted. It is no longer the Chief Technical Officers of councils who are the key decision makers. It is commercially oriented directors who understand risk, liability, and the consequences of non-compliance.

The Risks Facing New Directors

The directors joining these new water entities are inheriting infrastructure that, in many cases, has been inadequately maintained, inconsistently monitored, and operated on expired consents — in one instance, for 24 years. Their personal and professional exposure is significant.

Consent compliance. Under the new wastewater environmental performance standards introduced in December 2025, treatment plants must meet defined performance thresholds by August 2028. The grace period for facilities operating on expired consents is finite. Directors of CCOs that fail to achieve compliance face regulatory action from both regional councils and, at the national level, the Commerce Commission — which now sits as the economic regulator over these entities.

Biosolids management. The companion biosolids regulations establish Grade A stabilisation and Contaminant Grade 1 classification as the threshold for permitted land application. Facilities that cannot meet these standards face a discretionary consent pathway — more complex, more expensive, and far less certain. For directors, this introduces both project risk and timeline risk at a moment when they need to demonstrate early competence.

Odour, health and safety, and levels of service. These are the operational risks that keep directors awake at night. Odour complaints generate community opposition. Health and safety failures generate regulatory attention. Service level failures — overflows, non-compliance events, beach closures — generate headlines and political consequences. Wellington's experience demonstrates how quickly institutional credibility can collapse.

Greenhouse gas liability. While current standards do not yet include methane and nitrous oxide from wastewater treatment, this gap is widely expected to close. As Taumata Arowai acknowledged during the MFE webinar on the new performance standards, atmospheric emissions are flagged for future regulatory development. Directors establishing long-lived infrastructure today need to plan for carbon accountability tomorrow. One day, wastewater treatment plants will come underneath the greenhouse gas scheme and be accountable.

The rising tide of sludge. Higher performance standards for liquid treatment inevitably mean more sludge production. As treatment plants upgrade to meet nitrogen removal requirements — likely through sequential batch reactors or similar activated sludge processes — the volume of biosolids requiring management will increase significantly. Directors who solve the liquid side without a plan for the solids side are solving half the problem.

How Alimentary Systems Removes These Risks

This is where the conversation shifts from problem to solution.

Alimentary Systems' co-digestion approach — processing biosolids together with carbon-rich organic waste streams through thermophilic anaerobic digestion — directly addresses the risk register that new water CCO directors are staring at.

Consent compliance through process design. Thermophilic digestion at elevated temperatures with appropriate hydraulic retention times reliably achieves Grade A pathogen stabilisation as a function of process conditions. This is not an additional treatment step — it is inherent to the process. The biosolids regulations establish a clear pathway to permitted activity status for Grade A, Contaminant Grade 1 biosolids applied to land. Co-digestion is engineered to meet this threshold.

Contaminant dilution. When biosolids are co-digested with cleaner organic feedstocks, the concentration of heavy metals and PFAS in the final digestate is reduced proportionally. This shifts borderline Grade 2 material toward Grade 1 compliance — a materially significant distinction that determines whether land application proceeds as a permitted or discretionary activity.

Process stability. Counterintuitively, co-digestion is lower risk than processing biosolids alone. Sewage sludge on its own has a poor carbon-to-nitrogen ratio, leading to ammonia toxicity and digester instability — the reason so many standalone sludge digesters fail. The carbon-rich feedstock in a co-digestion process stabilises the biology and produces a more predictable, reliable outcome.

Greenhouse gas mitigation. Anaerobic digestion captures methane as biogas — a renewable energy source — rather than allowing it to escape as a fugitive emission. This positions facilities ahead of the inevitable inclusion of wastewater treatment in New Zealand's emissions trading scheme.

Odour and community impact. Enclosed, engineered digestion systems eliminate the odour issues associated with open sludge ponds and passive treatment. For directors managing community relationships, this removes one of the most visible sources of public complaint.

Consolidated waste management. Councils managing multiple organic waste streams — biosolids, green waste, food waste from commercial sources — achieve economies of scale through integrated processing. This means one facility, one consent, one management plan, and one set of compliance obligations, rather than multiple fragmented operations.

A Standardised Solution for a National Problem

The structural insight that matters for new water CCO directors is this: co-digestion is not a bespoke, site-specific experiment. It is a proven, standardised approach that has been deployed at scale across Europe and the United States for decades. The engineering is mature. The process chemistry is well understood. The regulatory pathway in New Zealand is now clearly defined.

This is significant because the new water entities — particularly those aggregating multiple councils like Waikato Waters — are explicitly looking for replicable models. Their mandate is to deliver economies of scale, not to commission one-off engineering projects for each treatment plant in their portfolio.

Alimentary Systems is positioned to provide exactly that: a standardised co-digestion platform that can be deployed across multiple sites within a CCO's territory, delivering consistent compliance outcomes while generating renewable energy and producing a beneficial soil product.

We are not inventing anything new. We are bringing proven capability to New Zealand — the same engineering, the same process, the same team that has delivered this overseas. The difference is that New Zealand now has both the regulatory framework and the institutional structure to deploy it.

The Window Is Now

The new performance standards set a deadline of August 2028. The new CCOs begin operational handover from July 2026. Directors are being appointed now, inheriting asset portfolios now, and making capital investment decisions now.

For directors of Waikato Waters, Tiaki Wai, the Northland CCO, and every other new water entity across the country, the question is not whether biosolids management needs to change — the regulations require it. The question is which approach offers the most reliable path to compliance while removing risk from the board's register.

Wellington has shown what happens when that question goes unanswered for too long.

This is part of our ongoing series on the regulatory environment shaping New Zealand's wastewater sector. See also:

• New Wastewater Performance Standards — What the new Taumata Arowai standards mean for treatment plants
• New Biosolids Regulations — What councils need to know about Grade A compliance and co-digestion

CONTACT US to discuss how co-digestion can address your biosolids compliance requirements.